Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes traded without significant variations. After the end of the negotiations with yesterday’s agreement, the process of Greece takes a more political nature. The next step is a vote in the Greek Parliament from yesterday’s agreement in Brussels, which should take place until Wednesday. Greek MPs must decide on a plan that is more severe than the one presented by the Greeks last week and something similar to the rejected by referendum on July 5. The agreement must also be voted in some parliaments as Finnish, Dutch and German. After this more political phase, the big question is how much the positive impact had already been anticipated by equity markets which have been rising in recent days. Using the DAX as a sample, European markets appreciated by 8% since the minimum last week up to yesterday’s highs. When the Greek issue won the role in the stock market situation (that we can consider in early May), the DAX traded between 11800 and 11900 (compared to 11484 from yesterday). Answered this question, the Greek question should be “filed” by investors for some time, although some economists, such as Mohamed El-Erian, former CoCEO family of Pimco funds and current chief economist at Allianz, have warned about the complexity of the further implementation of the agreed measures in the economy and Greek society. Gradually European investors will focus on business results (especially in the US), the intervention Janet Yellen in Congress and the behavior of the Chinese financial markets.
US markets closed higher, mirroring the positive reaction of European markets to the solution found to Greece. In the coming days, investors will follow the publication of results by several US companies, including some of the top banks such as JP Morgan, Wells Fargo, Bank of America, Citigroup, among others. In addition to these banks, General Electric, a symbol of American business world. For this quarter, analysts estimate a decline in EPS (earnings per share) of companies in the S & P500 between 4% and 4.40%. This is the first quarter since 2012 in which analysts anticipate a bending of corporate profits. Revenues will also register a decline of 4.20%. These predictions are negatively conditioned by estimates of a drop of 57% of the oil companies profits and 38% of its revenues. The analysis of Sandler O’Neill estimated that if the interest rates rise to 0.50% this year and 1.50% for next year, profits of US banks may increase from 20% to 30% during this period. Today, JP Morgan will report at 12:00 (GMT) their quarterly accounts; analysts estimate an EPS (earnings per share) of 1.44 USD and revenue of 24500 M.USD. For Wells Fargo (13:00), analysts estimate an EPS of 1.03 USD and a revenue of 21500 M.USD. The resilience demonstrated by the real estate market during the first months of the year, as well as the increase in credit interest rates for housing should have favored the bank.