Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes were traded with modest gains. During the first hour of trading, investors will react either the Bank of Japan’s decision and the results that were published before the opening. Again, the banking sector will be in focus. UBS announced a fall of 14% of its quarterly results (including some non-recurring items), which reached the 1030 M.CHF against estimates of 668 M.CHF. The strength of the Swiss franc, low interest rates and falling investment income and asset management weighed on the results. Concerning the future, the bank was particularly prudent. BBVA announced a quarterly profit of 1120 M € (-7% compared to the 2nd quarter of 2015), which exceeded forecasts of 948 M €. The core capital ratio Tier 1 stood at 10.71%. Barclays said it recorded a profit before tax of 763 M.GBP, which fell short of the 985 anticipated M.GBP. The ratio Core Tier 1 stood at 11.60%. Also in the banking sector, Banca Monte dei Paschi di Siena, perhaps the most monitored bank in the world at present, should report today their quarterly accounts. Today, the financial newspaper Il Sole 24 Ore reported that in addition to the plan that the bank submitted to the ECB there is an alternative plan prepared by UBS and the former CEO Conrad Passera. Today at 21h00, the European Banking Agency (EBA) will publish the results of 51 of the 111 banks that were subjected to stress tests. Among these banks include five Italian banks and Deutsche Bank, institutions that have raised close monitoring by investors. It is important to note that stress tests will not result in approval or disapproval of the institutions involved. The EBA will issue assessments of the ability of the various banks when subjected to various risk scenarios. European opening will also be marked by the publication of quarterly accounts of other companies.
US markets closed with modest variations. The session was characterized by the contrast between the positive effects of business results (which mostly continue to exceed the estimates) and the negative impact of the oil drop. On one hand most companies (about 66% of total) continue to report profits higher than estimated, the oil companies have recorded very sharp falls in their results. Perhaps this negative effect could be mitigated if the crude negotiate a clear upward trend. In this hypothetical scenario, investors could envision a brighter future for this sector. However, in the last three weeks, oil has accumulated losses of nearly 20%, demonstrating that the oil industry recovery process can be long and arduous than expected a month ago. The technology sector is animated by an opposite feeling. At the start of earnings season, many investors and analysts worried that the global economic slowdown and the multiple risks faced could affect the sector. However, most technological companies have reported good results and in general has proved trustful for the future. From a macroeconomic point of view, to point out that today the publication of the 1st reading of GDP should confirm the acceleration in activity during the 2nd quarter marked by other economic indicators.
The long-awaited meeting of the Bank of Japan (BoJ) ended up having a limited impact on Asian session. In addition to a somewhat volatile initial reaction, the major Asian indexes ended trading with contained variations. The BoJ announced that it will double the annual purchase ETF to 56700 M.USD as well as the special program of providing credit to local businesses for a total of 24,000 M.USD. Despite the rise in the Nikkei, the appreciation of the Yen indicates that this decision fell short of the anticipated by the market.