Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European indexes climb, reflecting the good performance of Wall Street and Mario Draghi’s words. Yesterday the ECB President reiterated the full support of the Central Bank to the European economy through its quantitative easing program, which will last as long as necessary. These comments are important for two reasons. The first is that dispels some concerns that had arisen that the ECB, given the improvement of the European economy could reduce this program. The second is that financial markets often need evidence to support their convictions. The action of the ECB has been the main catalyst for European markets in 2015 and even without any reversal signal in its policy, investors cyclically need this support to be confirmed by the Central Bank. Today, the session will be influenced by two factors, both of a more technical nature. On the one hand, investors will attempt to monitor the increase of the S & P up of a resistance zone. On the other hand, investors will follow the Euro behavior. If the European currency surpass the zone of 1.1400 / 1.1450 may extend recent gains, constituting a brake on European indexes.
US markets closed higher, with the S & P closing in the critical zone of 2120. This time, the rise in yields did not penalize the market as a whole. A pattern that emerged during the session was the sale of sectors that are more sensitive to yields, such as cyclical consumption and utilities. At the same time investors increased their exposure to technology companies, such as the most representative (like Apple) as those who had registered sharp falls in recent sessions (like Facebook). An exception was Cisco, whose shares fell about 1% in reaction to results. Another factor favoring the rise of some stocks has been the weakness of the dollar, although European companies are more sensitive to exchange rate movements. Yesterday, the Commerce Department announced that the number of weekly applications for unemployment benefits fell by 1,000 to 264,000, confirming the lowest level in 15 years for this indicator, although hiring has also declined since the end of 2014. The Economists were expecting 275,000 for the number of weekly applications. This finding contradicts a number of weak indicators of the US economy. These indicators have prompted many economists to revise downwards their estimates for GDP and to extend the date for the increase in interest rates. Today, the main session topic will be watching if the S & P will be able to overcome the area of 2120, which would be significant from a technical point of view, as it would increase the probability of starting a new upswing of the US market.