Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices traded with losses, justified by the losses on Wall Street and the macroeconomic indicators in China. The volume should be lower than normal, as the German and Swiss markets are closed for celebration of the Day of Pentecost. Thus, at an early stage, the titles of the most cyclical companies should register a underperformance. The economic data in China may mitigate the positive effect of oil rise in the Asian session.
American indices closed lower, despite the initial impetus given by the positive reaction to the publication of retail sales. Retail sales recorded in April, the highest monthly growth since March 2015 (+ 1.30%). Economists anticipated an increase of 0.80%, based mainly in auto sales (+ 3.20% due to promotional campaigns) and fuel (due to the increase of 4.40% of the price). When excluding car and fuel sales, this indicator increased 0.90%, which is a good omen for the development of the economy in the 2nd quarter. So after the disappointing growth of 0.50% in the 1st quarter, retail sales point to an acceleration in the 2nd quarter. The confidence measured by the University of Michigan rose to 95.8 in May, against 91.0 estimated. The data given by the retail sales softened momentarily, the fears of investors in relation not only to the economy as a whole but also the prospects of the retail sector. However, this positive effect dissipated with the course of the session, with the retail sector ended lower (-1.40%), accumulating losses of more than 4% on the week. This behavior reinforces the importance of the results that some retailers, such as Walmart, will disclose in the coming days. The losses of the major indices could have been more significant if the technology (and Apple in particular) had not registered a technical recovery. In recent sessions we have seen a pattern a bit worrying. In some days last week, the rally that marked the beginning of these sessions was not followed, perhaps signaling that many investors are taking advantage of the market rises to decrease its exposure to the equity market.
Asian indexes closed higher, despite the worrying signs coming from the Chinese economy. The economic data in China continue to justify the seizure of investors. On Saturday, it was published that industrial production grew 6% in April, less than 6.50% anticipated by economists. Equally disappointing was the investment in fixed capital, in the same month increased 10.50%, short of the 10.90% forecast. Retail sales, which include some public entities expenses increased 10.10% in April, a lower variation than 10.50% anticipated. As private investment, domestic consumption is one of the priorities of the strategic plan of economic reform in Beijing. These data Relaunch uncertainty entity investors about the Chinese economy. During the month of January there has been a strong economic slowdown but later the data for February and March returned some encouragement. However, the latest April data back to make a bleak description of the Chinese economy. Adding that Reuters reported that during the weekend, the Chinese regulator would have urged, through an official letter, the major banks to increase their provision of credit.