Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
The European indices began the session negotiating with modest losses. The environment today is not very different from yesterday, as it remains the influence from the American indices, sovereign yields and the euro. Yesterday, the European currency suffered sharp losses by virtue of the words of an ECB member Benoit Coeuré, who said that the ECB should accelerate the pace of debt purchase program. The EURUSD pair broke today the level 1.11, so the upward movement of the last month is definitely compromised, and this is very positive for the European Stock Indexes. At sector level, some Spanish and Italian banks will react to their lower rate decided by Fitch. In total, the agency lowered the rating of five Spanish banks (including Bankia, Banco Popular and Liberbank), 7 Italians (Unicredit, Banca Popolare, B. Monte dei Paschi, etc.), 2 Dutch (Ing and ABN), two Germans (Deutsche Bank and Commerzbank), among others.
American indices closed without major fluctuations, just a day after the S & P and Dow Jones have reached their historic highs. Generally, the fact that the indexes reach new peaks is a decoy for many investors, which gives rise to a series of positive sessions before a slight correction. Data from the housing market gave some hope to investors. In April, the start of home construction reached the 1.14 million units (annualized number), which corresponds to the maximum of the last seven and a half years, thus surpassing economists’ forecasts (1.02 million). The granting of building permits also recorded a high increase (1.14 million), also exceeding estimates (1.07 million). These indicators show that the recovery of the housing market after the 1st quarter, has been much more clear than that attempted by other sectors of the economy. This dynamism of the real estate market is proven by the good results from Home Depot. This company specializes in the sale of household products, so its activity is intrinsically linked to the property market. The Home Depot reported quarterly earnings and sales higher than expected and raised its projections for the rest of the year, demonstrating the company’s confidence in the sector. Less exciting were Wal-Mart results, insofar as the quarterly results, as well as sales, were lower than estimated. Although sales in foreign markets have been penalized by the strength of the dollar, the weak revenue growth in the USA (+ 1.10%) is something alarming not only for the company but also for the American economy. Today, at the macroeconomic level, the minutes of the last meeting of the Fed should bring more clues about the debate within the Fed regarding the normalization of interest rates. Currently, investors expect the first increase in interest rates occurs sometime between late 2015 and early 2016.