Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European Markets traded moderately higher. Yesterday, Saudi Arabia, Venezuela, Qatar and Russia reached an agreement to freeze the current production, which is at the maximum in recent years. The first question that this agreement raises is whether the other OPEC members will follow this decision. Most likely, countries like the United Arab Emirates, Oman, Bahrain should follow Saudi Arabia. Iran is the main question. The abolishment of the sanctions that had been imposed was a great achievement for the country. This implies that Iran export oil again and their revenues can stimulate the stagnant economy after years of sanctions. Today, the representative of Iran within OPEC dubbed “illogical” the request made to his country to freeze oil production. However, OPEC has a long history of protracted negotiations, made of advances and retreats, confirmations and denials. According to the Financial Times, the Minister of Petroleum of Venezuela, one of the biggest promoters of the agreement, will go to Tehran to try to persuade the authorities of this country. A freeze on production will not generate a profound change in the supply/demand relationship for crude, but is a stabilizing base to its price. However, many investors argue that this agreement was less than expected (it was agreed a freeze in production but not a cut), and they also had shown skeptical if this freeze will be extended to other countries and if it will be fully met. Despite all this engaging, at this stage, European investors seemed more focused on the banking sector yesterday which was once again penalized. Last week, Deutsche Bank had been a kind of “health” barometer of the European banking system, but surely doesn’t seem to be a reliable sample of this same system.
US markets closed higher, led by banking and retail sectors. Contrary to what has been the pattern of recent weeks, oil prices fall turned out not to influence the course of the session. Even the oil sector closed higher (+ 0.99%). The retail sector (+ 2.42%) was driven by the most recent data on domestic consumption, including retail sales which were published on Friday. At this stage, the US economy is now characterized by a dichotomy. On one hand, the industrial sector and large multinational resent the economic slowdown in many parts of the globe. But on the other hand, domestic activity continues to give momentum signals, with the labor market to continue to grow and lead to higher wages and the housing market approaching the levels seen in 2006/2007 but without that speculative component, observed at that time. Moreover, recovery of the banking industry was more technical than fundamental. In terms of economic indicators, the sentiment among manufacturers deteriorated in February, with its index down from 61 in January to 58 in February, a level below the 59 expected by economists. Today, the Fed will publish the minutes of the last meeting. The information that this document will provide should not significantly differ from Janet Yellen statements before Congress: the international environment led to more restrictive factors for economic activity and if this scenario continues it shall have a negative impact on GDP. As such, Fed will continue to be vigilant. The minutes shall also describe the personal opinion of each member of the executive committee and so allow the degree of consensus around the Janet Yellen position.
Asian markets closed mostly in negative territory. The movement today can be explained, perhaps, by the profit taking after recent gains. The Shanghai shares was trading higher, as investors reacted positively to the fact that banks in this country have increased the credit granted in January to 390,000 M.USD.