Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European shares traded with some gains. Initially, the trend of the European session will be dictated by three factors: the rising oil prices, the slowdown of the activity of services in China and the results that were published before the opening. In Asian markets, crude oil traded close with gains of 2% due to the conditioning of the production in Canada and Libya. Repsol reported an adjusted net income of 572 M €, which comfortably exceeded the forecasts of 261 M €. As occurred with other oil companies, the areas of refining and chemical offset the negative effects of the fall in crude oil price. British Telecom announced an EBITDA of 2080 M.GBP compared to 1930 M.GBP anticipated. Eventually, the most awaited results of the day will be the Banca Monte dei Paschi di Siena. The Italian bank is the symbol of weakness that affects a part of the banking sector of the country, so its results will influence the prospects of global investors to the sector. The current situation is worthy of a high caution among investors. After the recent falls (which was more important in Europe than in the US), the DAX has a first support in the area of 9750 and later in 9500. Given the magnitude and speed of recent devaluations it can not be excluded that the German index (and reflexively European equities as a whole) to initiate a short-term recovery from this range.
US markets closed lower. The main reason for the fall yesterday was the very negative momentum that had been accumulated in previous sessions and that led many investors to reduce their exposure to the equity market. This pattern was evident in the fact that the worst performers were the same in recent days, including the technology sector, oil and biotechnology. At the macroeconomic level, according to ADP, the private sector created 156,000 jobs in April, well below the number estimated 194,000. As has been the pattern in recent months, small businesses, focused on services, continued to be the engine of job creation. It is premature to draw conclusions about the reading of this indicator, considering the modest correlation with the official employment report (to be published Friday). Still, it is not excluded that some economists to revise downwards their estimates for the official employment report. The ISM index for the services sector stood at 55.70 in April, to 54.50 estimated and orders to industry increased more than expected (1.10% vs. 0.80% forecast). On the positive side, the trade deficit narrowed in March to the lowest in more than a year (40400 M.USD), but the reduction is a reflection of the difficult climate that the export sector is currently experiencing (exports down 0.90% remaining at least a few years) and some caution by consumers (imports fell by 3.60% to the minimum of the last five years). Technically, the S & P has a support formed by the area between 2020 and 2033.
Asian indices closed with contained losses. The main event of the session was the publication of the Index Caixin PMI (published by Markit) concerning services. The activity of this sector fell from 52.2 to 51.8, confirming the decline already marked by the official index of the Chinese Government. Despite this setback, the services sector (almost exclusively dependent on domestic consumption) has shown a strong resilience to industry weakness and public investment.