Stock Markets – Closing Note – 25 May

Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

European markets ended slightly lower. The uncertainty associated with the political scenario in Italy continued to influence investor sentiment and had repercussions on the stock and debt markets. Banks’ stocks were the most penalized, especially the losses of Banco BPM, Unicredit and Intesa Sanpaolo. In the debt market, 2-year sovereign yields rose significantly to levels around 0.490, while the 10-year treasury yield were close to the 2,444, also with an upward trend, although much lower. The difference between the 10-year German and Italian bonds, the spread, considered as a barometer of investor sentiment, rose to 200 bps for the first time since June. In the foreign exchange market, the Euro maintained its downward trajectory against the US Dollar, thus moving towards the 6th consecutive week of falls. Regarding economic indicators, the (IFO) business confidence index, from the German Institute for Economic Research, remained at 102.2 in May, the same level as in April and thus stopping the downward trend of the last five months.

The main US indices traded in different directions, with fears about the geopolitical situation counteracting good corporate results. Tiffany shares are experiencing one of the best weeks. The luxury goods company rose more than 23%, after having reported comparable sales rose 7% in the quarter, exceeding expectations of only 2.6%. In international markets, the price of oil fell, after recent reports suggested that OPEC and other non-OPEC producers could increase their supply. In macroeconomic terms, two indicators were announced last Friday. Orders for durable goods during the month of April fell by 1.70%, a drop more than the 1.30% expected by economists. However, excluding transport orders, this indicator increased by 0.90%, above the expected 0.50%. On the other hand, the consumer confidence index measured by the University of Michigan was published, which stood at 98.00 during the month of May, against the expected 98.80. Next Monday, American markets will be closed, celebrating the Memorial Day.