Market update: Happy traders push Nasdaq to a fresh record high, German energy makers toughen up

12 Mar

by Mihály Tatár


Good Morning!


  • Markets were very satisfied with Friday’s US employment report – showing a robust and still expanding job market (+300.000 employed in February, way higher than any analyst prediction), and that only with a mild wage inflation (2.6%). (As mentioned before, the fear from wage inflation is the real worry for traders, as it would push the Fed into being very hawkish immediately and would erode corporate profits at the same time.) With this relief, risky assets rallied dynamically (SPX +1.74%, Nasdaq +1.79%, Nikkei +1.64%, Hang Seng +1.49%, except for Eurozone stocks minding the Italian mess – DAX -0.07%, MIB +0.06%, US 10Y yield 2.91%, WTI 62.10, Brent 65.60 USD, EURHUF 311.50, EURPLN 4.19). To put the movements into perspective, the S&P by now erased two-thirds of its February drop and is only 3% from its record high, while the Nasdaq jumped to a fresh record and the DAX is still 9% lower. (This is so far inline with my personal opinion, that the rally will break this year but movements will be zig-zag like). The Dollar itself didn’t move much (EURUSD 1.2320), but traders noted that the pair failed again big time at the ’magical’ 1.25 level (it’s called magical because it holds ever since the Fed-ECB conflict at the beginning of the year), and in the meantime, the  3M Libor quietly reached  2.09%, not making over-indebted, Dollar-funded companies happy.


  • The highly anticipated Saudi Arabian Oil Company  IPO – in theory selling 5% of the 2 trillion USD (!)  market value, making Facebook and Alibaba look pathetic in comparison –  is said to be delayed to 2019, or even further, according to unconfirmed leaks. The market is of course full of speculation of why this has happened – from a geopolitical power play on the US and China, to simply waiting for higher oil prices.


  • It seems that after the endless talk of strengthening small-and middle sized companies and breaking apart mega corporates, in reality every country is busy creating nation champions: EON announced it wants to buy Innogy (the largest operator of green power plants and grid networks, held by RWE) for 22 billion Euros, resulting in an energy powerhouse and allowing competition with larger foreign  rivals (Enel, Electricite de France), who were also looking to buy Innogy. (RWE is ranked 10th and EON 13th worldwide in power generation capacity.)


  • After encircling the enclave, Turkish forces prepared to enter Afrin in Syria, with Turkey reporting that it had already killed 3200 ’terrorists’ (these can refer both to Kurdish and non-Kurdish militia fighters). (It’s worth mentioning for the future that a German state premier, who expressed solidarity with the Kurds, received several thousand death threats, from social media accounts based in Germany and Turkey. But hey, integration is working out just fine.) The brutal battle for Ghouta (the Damascus suburb) between government troops and rebels continued as well, and several geopolitical analysts note that while the media grew insensitive towards front news, this is probably the final battle of the war. (Meaning, at least between Assad and the rebels  – the latter simply can’t continue if they lose even the Damascus theater.)


Have a nice week,



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