Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European shares traded with modest losses. Questions regarding the monetary policy of the Fed and the global economic situation will shape investor sentiment in the near future. In the medium term, the outlook for equity markets looks a bit threatening to the extent that uncertainties should not dissipate shortly. It is not excluded the occurrence of recoveries in prices (as a reaction to recent losses) but the underlying trend deserves caution. An uncertainty that was feared by investors would be a tie in the Greek elections, which did not materialize, and the Greek bonds climbed in the first hour of trading today.
US markets ended with sharp losses, following the uncertainty generated by the Fed’s release. The statement and subsequent Janet Yellen’s press conference did not bring any hint about the possible timing of the first increase in interest rates or on the pace of the standardization process of monetary policy. Perhaps the main contribution of the Central Bank to increase the uncertainty was a new variable in the conduct of monetary policy. Before the meeting, the development of employment and inflation were the main determinants of monetary policy. After the meeting last Thursday came a third: The condition of the global economy. The Fed gave particular emphasis to the state of the global economy, which has deteriorated in the last two months, given the instability of China’s economy and weakness in several emerging economies. Now, to anticipate the future steps of the Fed, investors will have to monitor the development of emerging economies and especially China. In fact, one of the many consequences of that meeting was the sharp drop in raw materials, especially oil (-4.20%), which also hit the mining, oil and industrial American sectors. Another sector that has proved particularly fragile was the financial. The rise in interest rates increases the spread between the rates that banks charge on their loans and the rates of deposits that banks receive, thereby increasing their net interest income.
With the exception of the Shanghai Stock Exchange, Asian markets ended lower, penalized by the uncertainty on Wall Street and other financial markets after the Asian closing on Friday. In China, the China Beige Book, a report inspired by the same document prepared by the Fed showed that the economy of this country is slowing but not in an overly worrying rate.