Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European shares presented slight losses. The economic data in China should press, at least initially, the most exposed sectors to this economy, such as the industrial and automotive. Banking shares may also under perform. This pattern, already occurred yesterday, due to concerns from investors that the ECB further reduce the rate at which remunerates deposits that banks have at the central bank. Negative interest rates penalize the profitability of banks because they can not compensate for the negative rates of their deposits with a decrease in the interest rate on deposits of their clients. However, a hypothesis that has been raised in recent weeks is that the ECB may apply different interest rates.
American indices (with the exception of Nasdaq) closed with some gains, which were due almost exclusively to higher oil sector (+ 2.35%), mining (+ 1.15%) and to a lesser extent the pharmaceutical sector (+ 0.80%). In energy markets, oil continues to rise. This upward movement appears to enter a new phase. In a first moment the market rally was driven by the closure of short positions. However, now the rise begins to take on a more fundamental character, as investors have a more balanced view of the relationship between supply and demand. On one hand, the most recent economic data in the US exclude the scenario of a recession in the country, so there is no risk of an abrupt descent. On the other hand, despite a flexure in the first months of the year, the European economy continues to grow, sustained by domestic demand, so fuel consumption shall not decrease. On the supply side (which continues to outpace demand), the signs are also favorable. Put aside the fears about the US economy, investors were focused on another part of the equation: when and how much the Fed will raise interest rates. Yesterday, the Vice-President of the Fed Stanley Fisher argued that inflation in the US begins to give some momentum signals but not added any more information. Another member of the Fed, Lael Brainard, argued that the central bank will have to be patient regarding the cycle of rising interest rates.
Asian markets closed lower against the disappointing data on the Chinese economy. In February, exports fell 25.80% and imports by 13.80%. Both falls are higher than the forecasts of economists who foresaw variations of -12.50% and -10% respectively.