Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes traded with some gains, justified by the rise in oil prices in the Asian session, which had a positive effect on other industrial commodities. The appreciation of oil in the Asian session were due to the decline in the dollar and a study by Bernstein which indicated that the accumulation of world oil reserves decreased in the 3rd quarter of this year, reaching the lowest value since the last quarter of 2014. In the last sessions we could witness the depreciation of the Euro against the dollar, which could be a damper to European markets if the situation of the other world markets deteriorate. The exchange rate Euro / Dollar is conditioned by several factors (difference in economic growth, inflation comparison, risk perception, etc.) but at this stage is the spread between US yields and the yields on Bunds to dictate the course of this exchange.
US markets closed lower, failing to recover from losses incurred in previous sessions. Conditioning US indexes were mainly the strength of the dollar and Stanley Fisher statements. The appreciation of the US currency, primarily explained by the rise in the spread between US and European yields, penalizes US multinationals, as it decreases the value of their revenues and profits. At this stage, the ranks of supporters of a rise in interest rates seem to be increasing, which may increase the division within the Fed. The session was also marked by the continuation of the earnings season of the banking sector. Bank of America reported an adjusted EPS of 0.42 USD (+ 7.30% over the same period of 2015), which exceeded the estimated 0.33 USD. The main business areas of the bank recorded profits but it was mainly the sharp rise in revenues from the investment unit (+ 39%) and cost reduction (-3.30%) which boosted the results. After several years in which profits were committed by the prosecution and the resulting penalties, the activity of the Bank of America seems to have entered a new phase. The bank shares have risen 0.31%. In recent years, the banking sector has drawn an interesting pattern. Whenever this sector achieves substantial gains before the earnings season in the week following the publication of accounts records devaluations (average) 1.50% regardless of the quality of their results. Regarding the macro-economic front, industrial production rose for the third time in four months (0.20%), mainly due to the production of consumer goods and building materials. The estimates pointed to an increase of 0.10%.
Asian markets closed with some gains due to the recovery of oil in the Asian session. In Japan, shares have achieved modest gains even before the appreciation of the Yen.