Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European shares were trading without major fluctuations. The selling pressure on the prices of various raw materials is expected to generate losses or at least dictate a under-performance of the oil and mining sectors. Other sectors should be conditioned by global environment, which begins to show less favorable than last week, but also by some company results published before the opening. Investors will begin to position themselves for the realization of the ECB meeting tomorrow. This position will not be seen only in the stock market as well as in the currency and bond markets. The decisions taken by investors in these two markets will have an impact on stock markets, generating a sequence cause / effect, which will show the correlation between the various financial markets.
After five consecutive sessions of gains, the S & P ended down. The main stock market indices reached important resistances and various technical indicators were at extreme levels, so, many investors decided for profit taking. This pattern was also observed in the oil markets, with many hedge funds to close or to decrease its exposure to this market. From the fundamental point of view, the alarming signs for exports and Chinese imports also conditioned investor sentiment contributing to the profit taking. In the bond market, the valuation of bonds (due to a lower propensity to investor risk) and the consequent decline in their yields favored the stocks of utilities. There is a negative correlation between these two assets as many investors compare the state yields with the dividend yield of utilities. If the dividend yield is significantly higher than the state yields, then investors will acquire the shares of utilities. Today, the macroeconomic agenda does not provide any publication but the oil reserves will be released in the US.
The fall in the price of many industrial raw materials (especially oil) as well as the correction of European and American indices during yesterday’s session led Asian shares to negative territory. In Japan, the Nikkei was also influenced by the appreciation of the yen, which was due to a lower risk propensity of investors, which penalized the shares of exporting companies.