Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European stocks are in consolidation after yesterday’s losses. The EURUSD broke the last month consolidation range (1.05-1.105), favored by weak growth in the US economy. The devaluation of the Euro had been a major catalyst which drove the rally of the European markets. Technically, the movement of the Euro yesterday is positive for the European currency, can not be excluded additional short-term gains. If this materializes, should assist to an overperformance of the mining and petroleum sectors (the fall of the dollar benefits commodities), while the more cyclical sectors and exporters (automotive, industrial, etc.) should register a underperformance. In terms of indexes, the DAX is the most vulnerable to appreciation of the Euro, and the FTSE100 (English index) the most favored by rising commodities. However, come news that negotiations between Greece and its European partners may have accelerated due to increased intervention of the Prime Minister Tsipras, with the possibility to be reached a pre-agreement by Sunday, which is subsequently submitted to the meeting of the Eurogroup on 11 May.
US markets closed with some losses. The session was essentially marked by macroeconomic issues: the publication of GDP and the meeting of the Fed. The weakness of European markets did not have a significant influence on American indexes in that it arose from a factor which is beneficial for businesses and the US economy: the fall of the dollar. The Commerce Department reported that the US economy grew only 0.20% in the 1st quarter of this year. Although a slowdown was expected (economists anticipate a growth of 1%, in contrast to the 2.02% observed in the last quarter of 2014), the magnitude of the slowdown was somewhat surprising. The bad weather that has plagued the East Coast, the strength of the dollar, the strike at the ports of the West Coast as well as the decline in the oil business were the main causes of this poor performance. According to some economists, the bad weather had a negative impact equivalent to 0.50% of GDP and strikes about 0.30%. Private consumption, which accounts for almost 70% of GDP, grew only 1.90% (compared to 4.40% recorded in Q4 2014), even before the positive effect of the fall in fuel prices. The highlight of the day was the meeting of the Fed. This event brought no major clues about the future of interest rates or the way the Central Bank intends to normalize its monetary policy. In its statement, the Fed recognizes the weakness of the economy during the 1st quarter of this year, attributing the reason to factors considered passengers as the strength of the dollar and the oil drop.