2018 bequeathed on the new year an important undetermined economic scenario, whose solution is the key to interpreting the dynamics of international securities markets in the coming months. <\/p>\n\n\n\n
In fact, the magnitude of the stock market correction underway since February and September of last year, depending on the bourse, will depend mainly on what will happen in relation to the GDP of the world\u2019s largest economy, the US. The rapid retracement of the marked correction of the US indices at the end of 2018, which allowed them to recover more than half of the loss suffered in January, leaves little doubt that investors are convinced that the economy on the other side of the pond is not at risk of going into recession, even though growth is slowing. In fact, the recent about-face of the Governor of the FED, which after two consecutive increases in the base rate, very badly digested by the markets, has decided to send a reassuring message to the market, saying that from now on monetary policy will be much more dependent on the publication of current economic data rather than strategic considerations. In practice, the FED has momentarily suspended QT, which began at the end of 2015, aimed at normalizing the liquidity dynamics present in the system after the extraordinary stimulus following the 2008 crisis. Too bad that this repentance could turn out to be late, in the sense that the economy takes a very long time to absorb changes in the reference variables such as interest rates and liquidity in the system. If you add other relevant elements that are affecting the economic situation, such as the prolonged partial shutdown of the federal government and the long-running trade dispute with China, it could be assumed that recessionary factors will prevail at least in the first half of 2019. Therefore, the data on US GDP growth for the first quarter may turn out to be more disappointing than expected, coming close to 1% in real terms, instead of the 2% expected, causing renewed disappointment on stock markets. <\/p>\n\n\n\n
From a technical point of view, the S&P 500 index has for several sessions hovered around the 2700 level, which represents a recovery of almost two thirds of the previous correction and is a strong resistance level to the upside. Rebounds of this nature, within a bear market in the medium term, are not unusual, but what should be suspicious is the modest trading volume that characterized this technical recovery. It seems, therefore, to confirm the thesis that both the sharp fall at the end of the year and the recent recovery are due to algorithmic trading systems. So, in the absence of confirmation by volume and considering the important role that these computer programs play on Wall Street, free from cyclical considerations, it seems reasonable to hypothesize that the current over-bought situation will correct in the short term with a first objective at the 2600 level followed by the 2550 level. On the other hand, Governor Powell’s change of course makes it possible to extend the time horizon the possible return of the index to the December lows, making it more probable that there will be ample lateral movement between the levels indicated above until cyclical dynamics are clarified by the middle of the second quarter.<\/p>\n\n\n\n
The other primary global markets have experienced more modest but satisfying recoveries, with the bourses of emerging countries at the forefront, aimed at discounting a future weakening of the dollar that seems inevitable, given that future increases in the base rate could prove impracticable. From a technical point of view, it is advisable to be vigilant over a possible breakdown of resistance for the greenback at 1.17 to the euro. The positive recovery in the price of gold must also be linked to the prospective doubts on the strength of the dollar, accompanied by concerns about the extent of the global slowdown. The EuroStoxx 50 European stock index has had a similar trend yet slightly less marked than the US indexes, resulting in a confined range between 3050 and 3200 points. The latter level is within reach of the index in the short term, where it is advisable to lighten positions as the two main economies of the area, Germany and France, stagnate and the Italian economy has just entered into a technical recession. On the other hand, the BRIC stock exchanges, with the exception of India, in recent weeks indicate the completion of the accumulation phase which began at the end of 2018, representing a valid investment alternative.<\/p>\n\n\n\n
Nicola Bravetti Data Source: Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":"
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