Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes were trading higher. This week will be mainly dominated by political events. The first is the referendum on the permanence of the UK in the EU, which will take place on Thursday but the results will only be known at dawn the next day. The second is the holding of legislative elections in Spain on Sunday. This issue has been relegated to the background a little but with their approach and disclosure of ultimate surveys will have an increasing impact in the Spanish financial markets and to a lesser extent in Europe. At the economic level, the main point of interest will be the testimony of Janet Yellen in Congress on Tuesday. Regarding the referendum in the UK, surveys published over the weekend show a tie between the two sides, with the undecided representing between 8% to 10% of the electorate. These figures contrast with the indications observed before the suspension of the campaign that pointed to an edge of the “Leave” supporters. In addition to the surveys and the indications given by bookmakers, global investors will observe the behavior of the British Pound. In similar situations (as the referendum on independence in Scotland last year or in Quebec in 1995) the foreign exchange markets were able to anticipate the outcome of these elections. Thus, if the pound is valued it signals that financial markets are assigning a higher probability of the “stay” in the EU, and a devaluation would represent the opposite situation. This morning, the British Pound was negotiating higher against the dollar.
US markets closed with modest losses. Despite all the uncertainty surrounding the financial current panorama and the approach of important political events in Europe, the major indexes managed to contain weekly losses to just over 1%, remaining at about 3% of their historic highs. Friday session was more marked by the closing of futures and options and specific factors that probably geopolitical nature factors. Apple ended with losses of 30.2%, explained by the prohibition imposed by the Chinese authorities to the sale of iPhone 6 and iPhone 6 Plus, justified by the market in this town of a Chinese smartphone with similar characteristics to the one from the American company. This news not only had an impact on shares of Apple as in securities of other technology companies whose business depends on the Cupertino company. The pharmaceutical sector was another sector that conditioned the trend of major indices. After several weeks collecting investors’ preference because of their defensive nature, investors decreased their exposure to pharmaceutical shares. The positive highlight was the oil sector, which benefited from a remarkable recovery of the crude price after several sessions of intense selling pressure. The rise in crude on Friday is associated with a recovery of some risky assets (due to a decrease in fears for the Brexit) and a technical reaction to the losses suffered in the previous days. From a fundamental point of view, there is still an imbalance between supply and demand, which although not as pronounced as at the beginning of the year continues to persist. Regarding the macroeconomic outlook have been known two indicators on the housing market. During the month of May, Housing Starts decreased 0.30%, compared to a higher expected drop of 1.90%, while building permits increased only 0.30%, compared with an expected increase of 1.30%. Today, American markets will be focused on observing the evolution of the British and European markets. However, for investors in Wall Street the next important event will be tomorrow’s intervention of Janet Yellen in Congress.
Asian shares closed higher, with the decrease of fears for the Brexit. This generated a lower risk aversion that favored equity markets and penalized the assets that investors had used as a refuge in the previous week. Among these assets figured the yen, whose depreciation had a very positive impact on the Nipponese stocks, which were those that achieved greater gains in the Asian session.