Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European stock market traded with some gains after the strong losses from yesterday. Apart from the reaction to the close of Asian stocks, European investors will incorporate in their analysis the results of various Companies which were announced before the opening. Briefly, Endesa, Michelin, chain supermarkets Day and Orange have published results that exceeded analysts’ forecasts, while oil BP reported a loss greater than the estimated. The German MAN showed a loss and reduced their projections in terms of sales and profits for this year. In the market for raw materials, gold and oil traded lower, but copper, platinum and palladium were recovering part of recent losses. Therefore, it is expected that the mining and petroleum sectors continue to exhibit high volatility. Technically, European indices start approaching oversold levels, which does not imply an imminent technical recovery, however investors should be aware of this possibility. Yesterday, DAX closed within an important support area (11035-11090).
US shares had another negative session. The fears aroused by the weakness of Chinese stock markets led to a sharp increase in risk aversion. Although there are still signs of contagion of instability in financial markets to the real economy, the heavy losses of the Shanghai and Shenzhen exchanges reinforced the fears of investors about the state of the global economy and consequently the profits of American multinationals. The present situation confirms the evidence of slowdown in China and the stagnation of some emerging economies such as Brazil and South Africa. The copper (copper), whose cycles anticipate with some precision the economic cycles, lost 26% in the last 12 months. In this context, the US economy appears as an oasis. Orders for durable goods grew by 3.40% in June, exceeding the 3% estimated by economists. This indicator is strongly influenced by aircraft orders. In June, Boeing received an order for 161 planes, after the Air Festival of Paris-Le Bourget. In May, orders were only 11. The recent losses in the mining and industrial sectors, encouraged by the fall in the price of raw materials and the instability of Chinese financial markets, led these sectors to extreme oversold levels. Therefore, grows the possibility of a short-term recovery of the mining and industrial stocks that would boost the rest of the market. However, it should be noted that this hypothetical recovery will be short-term. The medium-term technical state of the S&P has been deteriorating with a dwindling number of stocks contributing to the rise of the index, which shows signs of being unable to approach the maximum of the year. After the results, gradually, attention will focus on the Fed meeting that starts today and has its outcome tomorrow with the release of the statement of the meeting.
Asian markets managed to contain the impact of volatility and renewed weakness of Chinese stock markets. In Shanghai, the main index (Shanghai Composite) opened with a drop of about 4%, aggravated those losses up to 5%, recovering some of the ground lost (-1%) and at 7:20 am was negotiating with a decline of 2.60%. Yesterday in the evening, the Beijing government announced that public institutions will increase the purchase of shares and the Central Bank said it will increase liquidity injections in the money market.