Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes pointed up. After the sharp losses of the last sessions is expected that the main European indices initiate a technical recovery. From an economic point of view, the situation remains delicate. There is still no agreement between the Italian government and the European Commission as to how to capitalize banks, namely Banca Monte dei Paschi di Siena. In England, real estate funds continue to suspend the possibility of redemption. English real estate market, especially in the London area, has been one of the most dynamic worldwide. Several investors sought this market to diversify its portfolio of assets, other acquired properties in England as a solution to a situation marked by equal interest rates or below 0%. Other investors faced the English real estate market as a refuge: in 2011, the Greeks were the main buyers of homes in London. Now, with the strong depreciation of the pound these investments lost value when denominated in the national currency of these investors.
US markets closed higher, continuing to show some resilience in relation to European developments. The boost US stocks were a number of factors. One of these factors is the fact that many global managers have changed the exposure they had to European equities by US equities, which has acted as a buffer to the selling pressure generated by the uncertainty that prevails in the current environment. Another catalyst for yesterday’s recovery was the publication of the minutes of the last meeting of the Fed. In these documents, its members were quite apprehensive about the referendum in the United Kingdom and the potential effects that the exit from EU could have worldwide. Once again, the Fed proved to be afraid that some external economic or financial shock could hit the US economy, so the majority of its members expressed a cautious stance towards the rise in interest rates. Investors seem to have ruled out the possibility of an increase in interest rates in 2016, which contributed at least partly to dispel some current uncertainty. Another factor that boosted major indexes was the rise in oil, which continues to exert an important influence on the stock market. Rising oil seems to have been more of an economic nature than based on fundamental factors. At the macroeconomic level, the services sector accelerated strongly in June, with its ISM index reaching 56.5 in June compared to 52.9 recorded in May and higher than the estimates of 53.3 by economists. The improvement included all of its components, especially the job that went from a contraction phase to an expansion. However, as compared to other indicators it is pertinent to note that the reading of the ISM refers to a pre-given referendum and as such has limited usefulness. Today, investors on Wall Street will continue to observe the behavior of European indices. The publication of oil reserves (15:30) may be an important point of the session. If the market response to this publication is positive then the stock market indices may have an important factor of support.
The main Asian markets showed opposite trends. Korean markets, Hong Kong and Australia ended up, reflecting the good Wall Street performance. In China, the Shanghai and Shenzhen exchanges closed with losses on the day the Prime Minister Li Keqiang suggested that the economy could not achieve the goal set by the government, a growth of 6.70% in 2016. In Japan, despite the lower risk aversion among global investors, the yen continued to gain value, which penalized the Nipponese equities. According to some economists if the exchange rate dollar / yen is below 105, most Japanese exporters suffer losses in its external units apart from losing competitiveness in international markets. In Tokyo, the yen traded at 100.90 against the dollar.