Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices traded with modest gains. The morning will be based on expectations of the ECB. At today’s meeting of this institution, investors will try to find clues as to when this institution will start the process of normalizing its monetary policy. This standardization should be based on the progressive reduction of the asset purchase program and the gradual rise in interest rates. It is likely that at this meeting, the ECB in its communiqué and in the press conference will keep the broad lines of previous meetings. The appreciation of the common currency undermines the ECB’s intention to stimulate inflation (by making prices of imported goods cheaper). On the other hand, by reducing the competitiveness of European companies in foreign markets, the appreciation of the Euro may negatively affect European exports, which in some Member States continues to be one of the main drivers of economic growth. The valuation of the Euro together with the beginning of the process of normalization of the monetary policy will be two subjects that must be approached in the press conference of Mario Draghi that begins at 13.30.
US markets closed higher, with major indexes reaching new all-time highs. The catalysts of this movement were the optimism regarding the earnings season, the drop in yields and some automatic purchases of trading programs, quite typical when indexes break important technical barriers. Morgan Stanley shares (+ 3.30%) offset the general trend of other banks by reacting positively to the results presented. The bank reported higher-than-estimated earnings and revenues as well as a smaller break (only 2%) in trading revenues. This fall was more than offset by the increase in revenues from the unit of wealth management. Of the 53 S&P companies that have reported their quarterly accounts, 77% exceeded profit forecasts and 75% estimated revenue. Today, the main event of the day will be the ECB meeting. This event will have an impact on European yields which, in turn, will condition US yield trends. The movement of these interest rates will influence the Euro / Dollar exchange rate, which will have repercussions on the stock markets on both sides of the Atlantic.
Asian markets closed higher in a session marked by expectations of the ECB meeting and reaction to the Bank of Japan meeting. This institution maintained the broad outline of its policy and changed its inflation projections for the 2018 biennium / 2019, from 1.40% to 1.10% and from 1.90% to 1.80%. Investors were now waiting for Governor Kuroda’s press conference at 7:30.