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Global sentiment yesterday was mixed after Morgan Stanley reported poor quarterly results and China announced that their third quarter GDP growth was less than 7% causing market jitters once again. US markets started on a weak note but managed to finish on a green note as Dow Jones, S&P 500 and NASDAQ gained +0.08%, +0.03% and +0.38% respectively. In Europe, DAX gained +0.59%, CAC barely moved gaining only +0.03% while IBEX shed -0.24%. In Asia, Japan markets were down while China markets barely moved. It seems like investors are waiting and anticipating what China will do to avert their slumping economy.

Morgan Stanley’s profit dropped by -42% raising worries about the health of the world’s biggest banks. The drop in Morgan Stanley’s earnings capped the bad quarter for US banks after investors left the bond, currency and commodities markets.

China’s economic growth dropped below 7% for the first time since the global financial crisis; after it registered a 6.9% growth from July to September 2015 just slightly beating the 6.8% estimates. According to analysts, China’s growth might continue to slide next year unless the government will implement radical measures to avert the slide. Some analysts see the Chinese government implementing a stimulus after the growth slide. The underperformance of China in the third quarter led to a -2% drop in oil prices. China is the world’s largest energy consumer.

The PSE index barely moved yesterday after it shed -0.88 points (-0.01%) and closed at 7,054.86. It remains at the higher end of the range and support could possibly be at 6,910. The major buy zone though remains at around 6,700.

 

 

 

PSEI (10-20-15)

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BY: MARCO VELASCO