Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European markets were trading with slight gains, benefiting from the positive closing of the Asian indices. Today will be published the final reading of the PMI index (Purchasing Managers Index), which should confirm that the eurozone economy is recovering at a solid but steady pace, based on the ECB’s action, the depreciation of the Euro, the price decrease of oil and revive domestic demand in some. In the coming days investors’ attention will remain focused on the Greek situation. The talks between the leaders of this country and its creditors resumed yesterday. According to the first reports, the talks began with the traditional Greek optimism and skepticism of its European partners. On Saturday, Interior Greek Minister, which did not participate in the meetings, said he believed an agreement will be reached before the June 5 repayment deadline of a IMF loan to Greece. The Greek Minister of Economy shares this optimism but warned that his country does not have a backup plan (or plan B). Yesterday, was scheduled a video conference between the Greek leaders, German and French, in order to facilitate the conclusion of an agreement through political means.
American indices closed with contained losses, driven by disappointing economic data and the weakness of European markets. The US economy suffered a bending of 0.70% in the 1st quarter, contrary to the first estimate that pointed to an increase 0.20%. The reason for this downward revision (which was somehow expected) relates to the higher than anticipated trade deficit and a low level of inventories. More worrying was the negative impact of the dollar in corporate profits and the strong fall in investment in the oil sector. The Chicago PMI index, which measures manufacturing activity in the region, suffered an unexpected drop of 52.3 to 46.2 in May, against estimates of 53.0. Thus, below 50.0, the activity in the Chicago area is in a contraction phase. Consumer confidence, measured by the University of Michigan, reached 90.0 in May, matching economists’ forecasts but falling short of the 95.9 recorded in April. Today, the spotlight will fall on the publication of the ISM index, which describes the manufacturing activity in the country, and that is one of the tools most used by economists and fund managers in their analysis of the US economy. The prevailing belief in the market is that the US economy will recover in the 2nd quarter, after a troubled early years. However, indicators for April shaken this belief of investors, showing a very modest recovery in various sectors of the economy.
Asian markets closed higher. The main point of the session was the strong recovery of the Shanghai Stock Exchange (+ 3.60% at 7:00 am) after accumulated losses last week. The Nikkei appreciated for the 12th consecutive session, the longest positive series since 1998. In China, the PMI index was published on manufacturing activity. In May, this index prepared by the government showed a slight improvement of 50.1 to 50.2, thus remaining above the 50.0, line that separates expansion from contraction phases. The PMI index, calculated by HSBC, which focuses mainly on small and medium enterprises, also achieved an improvement (from 49.1 to 49.2) but keeps a contraction phase.