Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European equities traded lower, reflecting the decline in US stocks after the European close and the fall in Chinese stock markets. However, this negative effect may be mitigated by the appreciation of oil in the Asian session. As mentioned last week, the consistency of the recovery of European indices depends on the S & P’s behavior. Thus, the ability of European indices exceed the short-term resistance (9580 in DAX) will depend on the S & P’s ability to definitively break the zone of 1940/1950.
US markets ended without major fluctuations, after a promising opening. The session was dominated by the publication of economic indicators, although oil has influenced, again, the evolution of the main indexes, including the Dow Jones and S & P. Oil behavior mirrored the actions. Initial gains were slowly dissipated despite some positive news. In the next two or three weeks the production of crude oil in Iraq in Nigeria is expected to decline due to the instability prevailing in some parts of these countries. At the macroeconomic level, household consumption increased to 0.50% in January, exceeding the forecast of 0.30%, supported by rising wages which boost household spending. The increase in house prices also contributed to an improvement in consumer confidence. The approach of the preferred measure of inflation from the Fed to 2% raised some concern in many investors but the money markets, which are an excellent barometer of the reference rates, assign a probability of 57% to a rise in interest rates in 2016. The US GDP for the 4th quarter was revised upwards from 0.70% to 1%, against economists’ forecasts of an increase of only 0.40%. In addition there has been a minor fall in investment and a decrease in the trade deficit. Domestic consumption, which represents 70% of the economy, was less dynamic than expected (2% vs 2.20%) due to lower sales (in value) of fuels (due to falling prices) and clothing as a result of mild weather in November and December. The trade deficit increased from 61500 M.USD in December to 62200 M.USD in January. This was the highest level since June. The confidence index of consumers, as measured by the University of Michigan, reached 91.7, above the first reading (90.7) but lower than the 92.0 recorded in January. From a technical point of view, today’s session and probably also tomorrow will be particularly relevant. If these days, the S & P can not be located convincingly above the zone of 1940/1950 then is increased the possibility of a short-term correction.
Most Asian markets ended lower. Chinese shares reached the minimum of the last 15 months. The Shanghai stock market fall was due to some disappointment at not being announced any program or stimulus to the economy during the G20 meeting held in Shanghai.