Home > Blog > Trader talk > Trader Talk: An Analysis of the Markets this Morning

Good morning,

Markets are called to open flat this morning. This is what's happening today:

  • China’s services industries grew at the fastest pace since August;
  • Data today may show orders to US factories increased in December;
  • European investor confidence rose this month;
  • Of the 138 companies on the Topix that have reported earnings this quarter and for which Bloomberg has estimates, 59% exceeded profit forecasts;
  • Panasonic, Japan’s second largest TV maker, surged 17% after posting an unexpected third-quarter profit. Mitsubishi Motors Corp. gained 20%;

Companies reporting results in Europe today are: Julius Baer, Randgold Resources, 888 Holdings, Anglo American Platinum

Companies reporting results in the US today are: Gannett Co Inc, Sysco Corp, Simon Property Group, TransDigm Group, Gilead Sciences

Shares in Portugal have beaten every developed market this year as investors bet Europe’s debt crisis is subsiding. Chinese stocks entered a bull market, signaling the world’s fastest- growing major economy is gaining traction following seven consecutive quarters of slowing growth.

Japan’s Nikkei surged to the highest level since April 2010 as new Prime Minister Shinzo Abe succeeded in depreciating the yen by 7% against its biggest trading

partners. In the US, the S&P 500 rose to within 4% of an all-time high as the Federal Reserve keeps interest rates near zero and continues to buy government bonds with the jobless rate at 7.9%.

The MSCI World Index of stocks in 24 markets rose 5% in January, the most since 1994, as individual investors pumped record deposits into mutual funds, US profits increased for an 11th quarter, central banks kept interest rates at record lows and growth from Europe to China improved. The last two times stocks gained this much in January, world gross domestic product expanded at least three times the 2.4% that economists forecast for 2013.

While market strategists say that equities have already recorded most of this year’s gains, bears who predicted declines at this point in 2012 only to see the Standard & Poor’s 500 Index close up 13%, are being overlooked. Bulls say the rally is just getting started after US investor sentiment rose to a two-year high and billionaire Warren Buffett offered to buy the parent of the New York Stock Exchange.

Today I'd like to talk about Barclays. The share closed the session on Friday at 300.79p and alot of investors start to ask if its time to call it a day or keep on holding on to the stock. My opinion is that it makes sense to remain holders of Barclays at this point in time for a number of reasons. The situation in the UK is improving. Banks are cash rich, households are increasing their savings (deposit growth double to 6% in November compared to April 2012) and house prices are stable. Bank are lending more and although interest rates are falling, spreads are widening, increasing the banks' bottom line. Though mortgages were a low-loss loan book during the crisis, the current mortgage approval volumes are 33% above crisis trough levels, with November approvals for house purchases 163% above crisis lows.

Deutsche Bank have a price target of 360p on the stock and made the following comments – 'Barclays offers exposure to long-term growth and market share gains in capital markets within the investment bank and turnaround leverage in international retail and corporate banking. We think the stock looks extremely cheap on current earnings and given the potential for further upside from cost cuts and business rationalisation under new CEO Antony Jenkins: Buy.'

For more information on Barclays or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli