Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European stocks were negotiated slightly lower. The session yesterday was marked by a strong momentum in European markets, which allowed them to get closer to the maximum of the year, which in many cases have been achieved on the first trading day of 2016. Today we should watch the action of two opposing forces. On one hand, the strength of US markets on the other hand, the appreciation of the Euro, which yesterday approached the level of 1.14. The appreciation of the European common currency was one of the under-performance factors of European equities against the US, as well as the poor performance of more cyclical sectors. To this contrast of factors added the fact that the main European indices are facing significant resistance zones (DAX 10400; CAC 4600/4633), with various technical indicators at extreme levels. The current situation of European indices deserves to be followed with caution. At the sector level, it is not to exclude some profit taking in the oil sector after finishing the strike of workers in oil fields in Kuwait. This strike served a bit to compensate the negative impact that the failure of the Doha meeting had in the energy markets.
US markets closed with contained variations, although it is worth noting the weakness of the technology sector, which was due to poor results from IBM. IBM presented the lowest quarterly revenue in 14 years, since the results of new businesses, such as the cloud (cloud), failed to offset the decline in its traditional business areas. The company’s shares corrected 5.59%. Goldman Sachs reported an adjusted EPS of 2.68 USD to 2.63 USD which surpassed the forecast. Revenues amounted to 6340 M.USD, less than the estimated 6730 M.USD. These results are not positive and illustrate the difficulties that most American banks are going through. Profits from this quarter are only half those of the 1st quarter of 2015 and revenues suffered a drop of 40%. In the case of Goldman Sachs and Morgan Stanley, the decrease in revenue was mainly due to lower trading activity, before the turmoil affecting the financial markets during the months of January and February. Other banks also suffered this effect, but it was somewhat mitigated by the revenue from the commercial banks. Still, the bank’s shares appreciated by 3.20%. At the macroeconomic level, the Housing Starts rose in March to 1.09 million units (annualized number), well below the 1.17 million estimated, representing a decrease of 8.80% from the previous month. The granting of building permits totaled 1.09 million, also below the forecast of 1.2 million. These figures point to a slowdown of the housing market, a phase in which economists have been successively cut its projections for GDP for the 1st quarter of this year. The attention of investors focus now in the financial accounts of American multinationals. In relation to banks, investors ‘expectations were similar to analysts’ forecasts, in relation to industrial companies, the stakes of investors may be more demanding than the analysts.
Asian indexes closed lower, with the exception of the Nikkei which continues to benefit from the resilience of the Dollar against the Yen after 3 months of decline. The Japanese market was also encouraged by the words of Central Bank Governor Haruhiko Kuroda who declared that purchases of ETFs by the latter are not too high. In other words, Kuroda suggested that the Bank of Japan may increase the volume of these acquisitions, which are part of the financial group captives that the institution purchases to inject liquidity into the economy. The most vulnerable market was the Chinese.