Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European shares did not show a definite trend. Yesterday the European indices tested or approached the anticipated resistance, including 9900 in the DAX and the CAC in 4423/4466. Now the question is whether the European stocks will be able to overcome such resistance. Most likely, the answer to this question will be given tomorrow by the publication of the US employment report. Today at an early stage, the mining sector might reach a over-performance due to the appreciation in the prices of metals in the Asian session. To notice the positive results released this morning (Adidas, Continental and Ahold).
American indices closed with some gains. After an uncertain start, US stocks have presented slight gains because of the oil resilience to the figures released by the Department of Energy. Oil fell after the Energy Department have revealed that crude reserves recorded a sharp rise last week (10.4 million barrels compared to 2.54 million anticipated). Perhaps the initial drop in oil would have been more significant if the decrease in gasoline reserves had not been higher than expected (-1.5 million vs -1.1 million estimated). However, after this negative feedback, buyers returned to prevail until the end of session. In recent weeks, the position of hedge funds has been changing. Until mid-February, these funds mainly held selling positions on oil, but in the last two weeks not only the pace of closure of these positions increased as some hedge funds began to get long on crude oil, which reinforced its upward movement. At the macroeconomic level, the ADP report showed that the private sector generated 214,000 jobs in February. Small and medium-sized enterprises, dedicated to services were the main generators of employment. This reading has exceeded 188,000 jobs predicted by economists. The Fed’s Beige Book revealed that economic activity intensified in all the 12 districts that make up the Federal Reserve, although at different rates. The account for this improvement in economic activity was mainly domestic consumption which more than offset the manufacturing activity and presented no change from the previous month. The labor market continues to expand but the consequent rise in wages has varied from state to state. In recent weeks, US economic indicators, the stability of the Chinese currency and the strong recovery of oil eased investors’ fears about the global economy.
Asian markets closed higher, with the exception of Hong Kong stock market. The Nikkei was boosted by the decline of the yen that seems to have lost the positive momentum of recent weeks, which had been one of the causes of the underperformance of the Japanese index. China published the PMI index for services, prepared by HSBC, which described a slowdown in this sector during the month of February of 52.4 to 51.2. Despite this setback this data is not very alarming because the service sector remains in an expansion phase and the month of February is conditioned, although on a smaller scale than the manufacturing industry, the celebrations of the Chinese New Year. This data also confirms that, despite the general economic downturn, some sectors of activity, more dependent on domestic demand have shown some resilience in this context.