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 without major fluctuations. Like yesterday, the behavior of state yields will dictate the course of European equities. Yesterday, there was a slight yield bending following the statements of Peter Praet, ECB’s chief economist. Peter Praet is considered an important adviser of Mario Draghi, reason why its words are usually accompanied by an increased interest and attention by the market. The ECB’s chief economist said that the current situation requires monetary policy to remain accommodative for an extended period of time before being normalized. Peter Praet’s statements are part of an ECB’s strategy to gradually prepare markets for a normalization of monetary policy in the Eurozone. In fact, Mario Draghi’s statements in Sintra spurred a steep rise in state yields, and now several ECB members want to soften (but not contradict) the words of the President of the Central Bank. The ECB wants to avoid the mistakes made by the Fed in 2013 when it tried to prepare investors for a gradual end to the quantitative easing policy. At the opening of the European session, oil traded with some gains. Favoring oil in the coming weeks may be the driving season. During this period, Americans travel on vacation, traveling the country by car, thus increasing gasoline consumption. However, this effect is seasonal and may attenuate, but not obscure, the current imbalance between supply and demand. Today, Ecofin, which brings together the Ministers of Finance and Economy of the Euro Zone. The main theme of the meeting will be the poor credit situation in Europe, and the most recent solution of the Italian Government for two banks should be approached in this light.
As in Europe US indices closed without major swings. During the first part of the day, the main indexes still tried a recovery, but later the selling side prevailed, disappearing the initial gains. In this context, technological stocks were the exception, achieving some gains (although as the other sectors have retreated in the second part of the session). The technological stocks were driven by Amazon (+ 1.80%) and Tesla (+ 0.90%). Today will be a conference organized by private bank, Allen & Co, in which several CEOs from the financial and technological world participate. These CEOs include investor Warren Buffett, Tim Cook, Mark Zuckerberg and Jeff Bezos. These conferences are always an opportunity to gauge the perspectives and opinions of people who influence the course of the companies and the sectors in which they operate. The debt market has been driven by a rise in state yields, caused by the words of the Fed and ECB members. Interestingly, at this stage of the market, European yields seem to be influencing American ones, not the other way round, as is usually the case. In fact, it was Mario Draghi’s words that gave the first major boost to global yields, a movement that began in Europe and rapidly spread to the other side of the Atlantic.
In a particularly quiet session, Asian markets closed at a mild rise. The day was marked by few points of interest, highlighting a modest weakness of the Yen that favored the shares of Japanese exporting companies.