Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European equities are technically rebounding from last week losses. The volume of the session should be lower due to the holiday in the London Stock Exchange. The evolution of the Euro will be guiding European equity markets. Last week, the strong appreciation of the Euro was the strongest reason for the fall of the main European indexes. The devaluation of the European currency was in the last 12 months, one of the main drivers of the sharp appreciation of European equities. The injection of liquidity by the ECB further strengthened this downward trend of the euro, benefiting European exporters. A popular strategy among global investors is buying dollars and selling other currencies including the Euro. This strategy despite fruitful has attracted too many investors, which poses some risks. Thus, if the recent appreciation of the Euro endure, many of these investors may decide to simultaneously close this strategy, reinforcing the positive trend the common currency. If this scenario materializes, may intensify the selling pressure on European indexes.
US markets closed higher last Friday, recovering a significant part of the losses of the day before. To encourage this recovery has been the rise in shares of biotechnology and Apple. The strength of the equity markets girded mainly to larger capitalization companies. After selling pressure in recent days, the biotechnology stocks again attract buyers (+ 3%). These stocks are mostly very volatile in that its value depends on its ability to generate future profits rather than its actual creation of results, which often is reduced. Thus, the oscillation of their quotations depends on the perception that investors have about the profits that these companies supposedly will have in the future. As already noted, at this stage the Nasdaq has essentially two engines: the biotechnology sector and Apple. With the Friday rise of both the Nasdaq was able to close with gains of more than 1%. Despite the positive feeling which animated the big caps, the economic data of the session was not encouraging. Technically, the S & P has fluctuated in a range of variation between 2072 and 2120, thus not presenting a set of short-term trend.
The good performance of Wall Street last Friday was overshadowed by another negative sign of the Chinese economy. According to economists at HSBC, the PMI index, which measures manufacturing activity, fell in April from 49.6 to 48.9. representing the biggest monthly drop from last year. The PMI index compiled by the Beijing government remained at 50.1, just above the line that separates a phase of expansion from a contraction. The difference between the two indices (which are developed through enterprise surveys) is explained by the fact that the government PMI is mainly directed to large enterprises while HSBC is conducted among small and medium enterprises.