Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices traded with contained losses. The evolution of crude oil will share the attention of investors with the intervention of several members of Central Banks. In the last year, the Central Banks lost the protagonism of previous years. Even so, they continue to play an important role in the financial market environment. Yesterday, the ECB’s Annual Forum began in Sintra. The importance of this conference lies in the fundamental issues that will be addressed and not so much in its ability to dictate the stock market trend this week. The Forum will address issues such as investment and growth in advanced economies. The discussion of these themes may give evidence of two unknowns that have intrigued the Central Banks: (1) Despite the economic recovery and the huge injection of liquidity, inflation has not registered a significant increase. In addition, wages have not risen significantly even in economies operating at full employment. (2) The continued decline in productivity in almost all OECD countries. These questions raise another question: will the Western economies have entered a new economic paradigm characterized by modest growths, falling productivity and contained inflation? If the answer is positive, this paradigm may imply that equilibrium interest rates will have to be lower than the past, so the process of normalizing monetary policy will be shorter than in the past. In addition to the players in Sintra, investors will follow Janet Yellen’s speech at 6:00 p.m. and the Philadelphia Fed Governor at 4:00 p.m. in London, as well as the words of the Minneapolis Fed Governor.
Intersectorial rotation remains the main standard of the American stock market. Yesterday, the Dow Jones and S & P achieved very modest gains, benefiting from the good performance of the banking sector. In turn, the fall in semiconductor stocks penalized the Nasdaq that ended the session with contained losses. As long as this rotation between sectors continues, the potential for appreciation and fall in the main indices is limited, as the correction of one sector is offset by the rise of another. Yesterday, the positive sentiment that animated European banking stocks infected its American counterparts. Following the bailout of Italian banks, investors await today’s interventions from various Central Bank members and the Fed’s scheduled information on the results of stress tests conducted by the Fed tomorrow. In the technology sector, there was a gain in semiconductor shares that were among the best performers on the Nasdaq in 2017. Oil traded volatility, alternating between sharp losses and significant gains, but at the end of the session ended Recovery that started 4 sessions ago. In terms of economic indicators, orders for durable goods decreased by 1.10% in May, a drop above expectations (-0.60%) and after the decrease of 0.80% registered in April. If we exclude transport orders, this indicator increased by 0.10%, compared to expectations of an increase of 0.40% and after the decrease of 0.50% registered in the previous month. Once again, economic data had a greater impact on the bond market than on the shareholder, leading to a decline in yields due to lower inflation expectations.
Asian markets do not present a common trend. Unlike yesterday, the appreciation of oil could not trigger a sustainable rise.