Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices were trading lower. The various European sectors should be influenced by some factors that have arisen in the last 24 hours. The technology and pharmaceutical sectors are expected to be weighed down by the weakness shown yesterday by their American counterparts. Mario Draghi’s statements in Sintra yesterday indicate that the ECB is ready to reverse the direction of monetary policy in the Eurozone. These statements have caused a generalized rise in state yields, which will have a negative impact on the more interest-sensitive stocks such as utilities, telecommunications and construction companies. The rise in yields caused a strong appreciation of the Euro, which reached the highs since August 2016 against the Dollar (1.1349). This strong valuation that extends the rally this year may begin to weigh on European export sectors such as the industrial, the automobile, among others.
US markets closed lower, with losses particularly sharp in the technology sector. In question was the postponement of the approval of the new legislation of the health system by the Senate. The reason for this postponement concerns the indecision or even the opposing position of at least 5 Republican senators. The reaction of the pharmaceutical industry and biotechnology companies (which are part of the Nasdaq) was particularly negative, as investors rush to make the gains made in previous sessions. The weakness of the technological sector spread to other sectors (even the oil sector that did not reflect the appreciation of crude oil), with the exception of the banking sector that benefited from the rise in yields. Today, investors will monitor the behavior of the biotechnology sector and the publication of US oil and gas reserves. Hedge funds have in recent weeks accumulated selling positions (supposedly equivalent to 162 million barrels) and have been one of the main causes of the fall in crude. Today, the FED will reveal the second part of the stress test results to which it submitted 34 financial institutions. The first part of the results was published last week and revealed that these 34 institutions would be able to withstand the negative impact of a severe recession. In the information to be released today, the FED will indicate which institutions (and to what extent) may increase its shareholder remuneration policy, namely dividends and / or share repurchase program. According to some analysts, US banks will be able to allocate about 120,000 M.USD to this type of policy.
The weakness of Wall Street marked the Asian session, but the markets of this region managed to contain the negative impact.