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China Rate Cut and ECB Stimulus Talk Drive Power Play for Global Markets


Today's financial recap and tomorrow's financial outlook.

Global equity markets blasted higher Friday on a wave of stimulus news.

ECB President Mario Draghi said today that there were no signs of improvement in the European economy, and that inflation needs to rise "as fast as possible". To that end, the ECB will increase the magnitude of its asset purchase program if current measures don't soon prove effective.

Meanwhile, China's central bank announced a surprise interest rate cut in an effort to improve slowing economic growth.

Global equity markets rose on the news, and the S&P 500 (SPX) made yet another all-time high at 2071.46 within the first 10 minutes of the US market open.

Midday profit-taking sent the index as low as 2056.75 by the afternoon, but it rebounded to finish up 0.5% at 2063.50.

For the fourth straight day, energy stocks firmed up, with the Energy Select Sector SPDR ETF (XLE) rising 1.3%. Aside from the stimulus news out of China and Europe, crude oil prices were boosted by ongoing speculation regarding a possible OPEC supply cut next week.

Additionally, Russia's energy minister said the country would consider cutting its own oil production to prop up prices. The Russian economy is highly dependent upon oil prices, and the slide this year has hurts its currency and increased uncertainty.

Video game retailer GameStop (GME) was a notably decliner today, falling 13.0% after the company reported weak earnings and forward guidance.

And software giant Microsoft (MSFT) fell 1.5% after Jefferies inititiated coverage on the stock with an Underweight rating and $40 target price.

Tomorrow's Financial Outlook

On Monday, the October Chicago Fed National Activity, November Markit PMI, and November Dallad Fed Manufacturing Activity reports will be released.

There are no major earnings reports on the calendar for Monday. However, momentum traders will be watching the action in Palo Alto Networks (PANW) and Qihoo 360 Technology (QIHU), which report earnings after the close.

Oil is likely to remain volatile with the upcoming OPEC meeting, uncertainty over the global economy, and unpredictable central bank activity.

In the evening, the Bank of Japan will release the minutes from its October 31 meeting, with Governor Kuroda giving a speech in Nagoya, Japan.

Twitter: @Minyanville

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No positions in stocks mentioned.

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