Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening European markets traded without major fluctuations. Despite the Wall Street decline and the renewed weakness of oil on Asian markets, European equities showed some resilience. The reason for this behavior is related perhaps to the fact that a significant part of the negative prospects for the sector are already incorporated in current prices. The Spanish market has yet to negotiate the aftermath of the parliamentary elections from yesterday. In the debt market, the Spanish bonds traded with some losses.
US markets closed with significant losses. The main reasons for this behavior, after the optimism of earlier this week, were essentially two. The first was the continued weakness of oil, which fell on Friday was not much significant (-0.60%), but it was enough to raise fears about the financial situation of some oil companies. However, in recent sessions these fears were transferred to the financial sector. Banks as well as being the lenders of the oil companies in difficulty (many of them focused on shale oil extraction) hold debt of these companies. So on the one hand, the bad-credit standing of banks increases, secondly, the amount of debt that holds the oil companies have lost value. Perhaps the expiration of futures and options may have been the main factor to condition the falls of the day. Quadruple witching days are marked by the closure of hundreds or even thousands of operations that not only influence the overall volume as volatility and market direction. Today’s session will serve to clarify how much of the fall of Friday is due to the maturity of derivatives and how much was due to the weakness of the market.
Most Asian markets closed higher. In Shanghai, the local bourse was mostly driven by financial stocks. In Tokyo, the stock market, which is the most correlated with Wall Street opened with sharp losses but was later able to recover, which allowed to reduce the initial devaluations.