Home > Blog > Trader talk > Trader Talk: An analysis of the markets this morning

Good morning,

Markets are called higher this morning. This is what's happening today:

  • The U.S. Federal Reserve and the European Central Bank meet this week as the International Monetary Fund said Europe’s debt crisis is likely to be prolonged;
  • Reports today showed South Korea’s industrial production fell for the first time in three months, Taiwan’s gross domestic product unexpectedly shrank, while Japanese household spending increased less than economists estimated;
  • Canon Inc., the world’s biggest camera maker, advanced 6.6 percent in Tokyo on a share buyback plan, pacing gains among information technology shares;
  • 10-year Italian debt is yielding 6.027%, 10-year Spain is yielding 6.613% and 10-year Portuguese debt is yielding 11.247%;
  • Brent is trading at $106.06/barrel;
  • Apple closed the session at $595.03 and Priceline closed the session at $682.54

US Treasury five-year yields were about nine basis points from a record low as Fed policy makers prepare to start a two- day meeting today. ECB officials announce an interest-rate decision on August 2. All this good sentiment in the market is on high expectations from the ECB and FED meeting. Yield on sovereign debt is coming down in Europe after Draghi last week said that he will do all it takes to save the Euro. It's not the first time that politicians put high hopes and never concluded anything. Though the ECB has been critisised throughout the whole crisis for not having done enough. On Thursday we will know what tools the ECB will use to stimulate the economy.

The currency play becomes more complicated at this point because it all depends on which of the two (FED and ECB) will go all out to stimulate the economy. However, there is a bias towards the ECB because the FED has done much more to stimulate growth than the ECB has so any type of good news out of Europe will be a positive for the Euro in the short term irrelevant that in the long term it will have negative effects on the currency.

Stock to watch: Marks and Spencer (Price 337.1p)

Marks & Spencer Group Plc, the 128-year-old department store chain, is offering private-equity shoppers the biggest bargain in more than seven years versus its main U.K. clothing competitor.

Chief Executive Officer Marc Bolland, who took over in 2010, has failed to revive the retailer’s shares, which are languishing 55 percent below their peak prior to the onset of a global recession five years ago. The seller of apparel, specialty foods and housewares is valued at 6.2 times earnings before interest, taxes, depreciation and amortization, after earlier this month reaching the steepest discount to rival Next Plc since 2005, according to data compiled by Bloomberg. It is also cheaper than 85 percent of similar-sized chains worldwide.

For further information on Marks and Spencer or other stocks and bonds we follow, contact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli