Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European markets negotiated with slight gains. Although the geopolitical situation continues to be the protagonist of the current situation, investors will react to some of the results that were presented before the opening. Daimler reported a quarterly EBITDA of 4,000 M. € (which includes a non-recurring profit of 690 M. €), supported by good sales of SUV and class E. In England, retailer Tesco reported an adjusted operating profit of 1280 M Which marginally exceeded the forecasts of 1260 M. £. Tesco’s activity has been influenced by the restructuring process and the impact of the devaluation of Libra. This last factor has led to a rise in the prices of imported goods, a rise that the company has had considerable difficulty in reflecting in its selling prices. The Spanish banking sector will also be highlighted even in the aftermath of the statement by Banco Popular that it has admitted that the institution could use a new capital increase or merge with another bank to solve the problems of the group.
The US indexes closed at modest losses, managing to recover a sharp share of the devaluations seen earlier in the session. The main catalyst for the recovery was the intervention of President Trump who said he would be willing to replace the Dodd-Frank law with another law. Again, Donald Trump’s words were somewhat vague, having failed to advance what the outlines of the new law would be. This news was enough for the financial sector to end up with minimal losses (-0.07%), not reflecting the sharp decline in yields observed in recent sessions. One characteristic of yesterday’s session that raises some concern is the phlegmatic reaction that equity markets have shown in the face of a sharp increase in geopolitical risk. This behavior takes on more worrying contours when it is observed that some asset refugees such as gold and US state bonds have reached their highs in recent months. In fact, several investors in the face of growing tensions in Syria and Korea have taken a more defensive stance by allocating a portion of their portfolios to these assets. However, most investors who are more focused on stock markets have apparently not altered their optimistic stance in recent weeks. Even so, some of these investors have resorted to the options market to protect their portfolios from possible downturns. This position was reflected in the fact that the VIX, the volatility index (which usually rises when investors buy mostly put options), reached its high this year. Today, investors will prepare for the earnings season of the banking sector (which officially starts tomorrow), keeping a close watch on developments in the Middle East and in Korea.
Most Asian markets closed lower, with investors tracking, with some apprehension about the situation in Korea. The most sensitive market was Japanese due essentially to two reasons. The first is that Japan is within the range of the North Korean missiles, so it is theoretically a potential target for a hypothetical retaliation of this country. The second concerns the fact that the Yen is considered by many global investors as an asset and its valuation negatively affects Japanese exports. In March, however, inflation in March increased by 0.90% year-on-year, after 0.80% in January but remaining at 2% -2.50% in the last quarter of 2016. The March reading may still have Been tampered with by the aftermath of the celebrations of the new Chinese Year. During the celebrations and in their immediate aftermath, the price of some commodities such as food and travel undergo sharp changes, distorting the reading of inflation.
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