Europe, USA and Asia stocks end mixed

Stock markets in Europe, USA and Asia closed mixed yesterday’s session.

The European Stoxx Europe 600 index declined by 0.54%. The German DAX index marked a decrease of 0.51%. The French CAC40 index fell by 0.56%. The Italian MIB stock index dropped by 0.23%. British FTSE100 index decreased by 0.17%.

US Dow Jones Industrial Average recorded an increase of 66 points (0.38 percent) to 17,634 points, S & P 500 rose 3.5 points (0.16 percent) to 2067 points in the morning session. Nasdaq recorded a decline of 14 points (0.27 percent) to 5084 points.

Shanghai Composite rose 0.65%, while Shenzhen Composite recorded a growth of 0.3%.
Japan's Nikkei 225 index fell by 0.98% despite good data on machinery orders in October and revised upwards GDP growth for the third quarter.
South Korea's Kospi index remained almost unchanged, closing the session with a 0.04% increase. The Australian index S&P ASX 200 closed with 0.55% downwards. 

China's economy will be the biggest loser by the strong dollar

The strong dollar will inevitably have a negative effect for some countries. The biggest loser, however, will not be American but Chinese economy. The main reason for this is that the yuan was bounded to the US currency to improve their financial stability.
So when the dollar grows versus other currencies, expectations are for a recent increase in interest rates in the United States. The increase, however, applies to the Chinese currency. The problem for Beijing is that the suffering from slowdown second largest economy in the world is twice more dependent on trade than the US.

“It’s a problem,” said Yukon Huang, a senior associate at the Carnegie Endowment for International Peace in Washington and a former World Bank country director for China. “Excessive appreciation at a time when the economy is sinking is a bad thing.”

He and other economists, including former U.S. Treasury Secretary Lawrence Summers, expect China will try to avoid that by allowing the yuan to fall against the dollar. Such a move, though, risks triggering political criticism in the U.S. with a presidential election less than a year away.
“They’re stuck,” Huang said. “If they depreciate the currency, they’ll come under attack.” Yet “they need to do so.”

Republican presidential front-runner Donald Trump has called China the "No. 1 abuser" of the U.S. and has accused it of “wanton manipulation" of its currency.

The U.S. economy certainly has been hurt by the dollar’s advance since mid-2014. (It is up more than 20 percent against a basket of currencies during that time, though only about 3 percent against the yuan.) The stronger greenback has made American companies less competitive in world markets, helping push exports down 4.3 percent through the first 10 months of this year.

But China faces even bigger difficulties from a strengthening currency. Trade amounted to 42 percent of its gross domestic product last year, compared with 23 percent for the U.S.

The Force awakens for Disney

Cinema’s brand №1 returns. The force will awaken with the seventh episode of Star Wars. The premierе is on December 18, 2015 and beside cash records that will probably come after so many years of waiting, the industry has turned the popular brand in profit machine. The Walt Disney Company (DIS: XNYS) is only one of the companies that are on the crest of a wave and will benefit from the new project.
Online sales of toys in the United States reached a 12-month high of 17.7 mln US dollars in September, which is 7 times more than in September 2014. Hasbro (HAS: XNAS) has exclusive rights for the sale of toys by paying 225 mln US dollars for licenses to Disney.

What we know so far

In 2005 it looked like the Star Wars saga was officially over. Lucasfilm and Twentieth Century Fox released Star Wars Episode III: Revenge of the Sith, which completed the prequels trilogy and tied the story back to the first film in the series. It was done, finished, kaput, and ended. 
But then along came Disney. In October 2012 the studio brokered a $4.05 billion deal to buy Lucasfilm, and with the deal came the announcement that they would be starting production on a whole new trilogy of Star Wars films that would keep the epic story going for years and years to come. Naturally,fan boys started to foam at the mouth with anticipation.

Disney’s shares

The previous episode of Star Wars - Episode III: Revenge of the Sith - had a budget of 115 mln US dollars. It brought revenues of nearly 849 mln US dollars. And this does not include revenues from the sales of DVD, computer games, toys, etc. The overall amount of incomes is about 33 billion US dollars. At the end of October 2012 Lukasfilm was acquired by Disney for 4 billion US dollars. Then the rumours about the new three films started.

Since the beginning of 2015 Disney's shares are up by 23%, presenting much better than S&P 500, which recorded only 2% growth for the same period.

Disney's share price 2013-2015. Source: Bloomberg

This increase is not accidental. Company’s earnings increased by 32% for the third quarter on an annual basis, which significantly exceeds the average for S&P 500. And earnings per share is up by 36%. So the trend of strong growth from the last two years retains.

And this is expected to continue. But let’s see what exactly will bring the saga!

Crude oil rises while US dollar is close to one-month low

Crude oil prices are growing today as OPEC ministers met in Vienna, while US dollar is close to  

one-month lows a day after staging its largest one-day fall in nearly seven years.

Brent crude oil futures LCOc1 were last up 65 cents at $44.49 a barrel at 1100 GMT (0600 EDT), having fallen earlier this week to a low of $42.43, within cents of August's 6-1/2 year trough.

U.S. crude futures CLc1 were up 55 cents at $41.63.

In the last few weeks, investors have run up big bearish bets, or short positions, betting on a fall in the price of crude oil, which could be rapidly unwound if OPEC were to give any signal that it might adjust its stance on supply.
           

The dollar .DXY rose, which would ordinarily depress oil prices as this strength can encourage non-U.S. investors in crude to sell their holdings in exchange for a higher profit in their own currency.

But Thursday's 2-percent slide in the greenback, triggered by a surging euro, left the dollar near its weakest in a month, ahead of the monthly U.S. jobs report that could cement expectations for the first U.S. rate rise in nearly a decade from the Federal Reserve this month.

In Vienna, OPEC's poorer members have been piling pressure on their richer counterparts led by Saudi Arabia to cut supply, but Riyadh and its allies appeared on Friday to be ready to stick to their strategy of protecting market share.

"What OPEC have on their side is the market is in quite a bearish mode, so there are quite a few shorts out there ... if we see anything that resembles a move towards stabilizing the price, then we could see (oil) move 20 or 25 percent higher within a very short period of time" he said.

Saudi Arabian oil minister Ali al-Naimi said ahead of the meeting growing global demand could absorb an expected jump in Iranian production next year.

On the demand side, China is likely to double its strategic crude oil purchases next year to take advantage of a more than a 60 percent fall in oil prices since June 2014.

Beijing will add 70-90 million barrels ofcrude to storage tanks in 2016 to build up its strategic petroleum reserves(SPR), according to most respondents in a poll of five analysts and datacollected by Reuters analysts.

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Euro at 7.5-month low after Yellen's speech

Today the euro is moving closer to a 7.5-month low against the dollar amid expectations that the European Central Bank (ECB) will announce additional stimulus to the economy and that the Federal Reserve will raise interest rates.

The diverging policies of the two central banks again came to the fore yesterday after Fed Chairman Janet Yellen hinted about raising interest rates later this month.

Her speech dragged the euro to 1.05500 against the US dollar, which was the lowest level since mid-April. The euro lost 0.16% and was trading at $1.0614 and recovered  60 pips since the intraday low.

Later today is expected ECB to present a combination of measures, that could include lowering the interest rates on deposits and increase in the volume of the program for bonds purchase.
The European currency depreciated by 7.2% since the previous meeting of the ECB.

Naturally, US dollar is investors’ target who sell euro, especially since the Fed hints about raising interest rates in December. The dollar index rose to 100.510 points, which was its highest level since April 2003.
Yellen said yesterday : "And, as I have noted, continuing improvement in the labor market helps strengthen confidence that inflation will move back to our 2 percent objective over the medium term."
“Holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and thus undermine financial stability”, said Yellen. 

US private sector added more jobs than expected

The private sector in the US has created 217 thousand new jobs in November, according to ADP private payroll report, that was released today.

The expectations of economists pointed slight increase to 190 thousand new jobs.
The data for October were revised upward to 196 thousand.
The results are based on surveys among companies with nearly 24 million employees. Usually the growth in hiring leads to promotion and salary. This in turn stimulates consumption, which is the key factor for the economy.
On Friday is expected publication of the report on employment outside agriculture for November, which is closely followed by the Federal Reserve. In October was recorded sharp growth in new hires, which increased expectations that the central bank will raise the benchmark interest rate from near zero.

Following the publication of the data, the dollar rose against the euro to 1.0580.

Data break-down

Payrolls for businesses with 49 or fewer employees increased by 81,000 jobs in November, down from October’s 91,000, further specifics showed.

Employment among companies with 50-499 employees increased by 62,000 jobs, a bit less than the 67,000 added last month. Employment at large companies – those with 500 or more employees – came in double the upwardly revised 37,000 jobs added in October at 74,000 for the month. Companies with 500-999 added 57,000 jobs, the largest gain for this segment in the history of the report.

And finally, firms with over 1,000 employees gained 17,000 jobs, after adding 28,000 in October.

As for the sectors, goods-producing employment rose by 13,000 jobs in November,down from 22,000 the previous month, while the construction industry added16,000 jobs after gaining over 30,000 in each of the two previous months.Service-providing employment rose by 204,000 jobs in November, a strong increase from an upwardly revised 174,000 in October