Stock Markets – Closing Note – 5 Sep

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

The behavior of European stock exchanges continues to reflect investors’ risk aversion. The day was marked by the start of talks between the US and Canada on a possible revision of the NAFTA agreement. In addition, some of the attention remains diverted to the news about customs tariffs on trade between the US and China. The banking sector was the only one to end up, as opposed to the technology that led the losses in sectoral terms, due to a series of reductions of recommendation. On the other hand, the German pharmaceutical Bayer depreciated, despite having reported a 3.90% increase in the results of the second quarter. In terms of economic indicators, in the Euro Zone, the PMI economic activity index stood at 54.50 in August, slightly above the expected 54.40. The same indicator, but for the services sector, stood at 54.40, as economists estimated. In Germany, the PMI for the services sector reached 55.0, compared to the expected 55.20.

Wall Street opened at a slight low, again pressured by US trade issues with its major partners. It should be remembered that the public consultation in the US on the imposition of new tariffs on imports from China, valued at 200,000 M.USD, will end tomorrow. The US trade deficit has now been known, which increased by about 10% in July to 50,100 M.USD, after the revised 45700 M.USD for the month of June. Estimates pointed to 50,200 M.USD. This was the record increase in imports which reached the highest level of the last five months, due to higher demand for oil and higher prices for this raw material.

Stock Markets – Closing Note – 3 Sep

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

The escalation of trade tensions between the US and China influenced the begining of the week, although some European markets managed to close on positive ground in a session that was marked by the closing of the North American market. Recall that Bloomberg reported that the Trump Administration would be studying the implementation of additional tariffs on 200 000 M.USD of imports from China. Bloomberg mentioned that the President had not yet made a final decision on the matter. Leading the losses were auto makers after Donald Trump rejected the European Union’s proposal for a reciprocal zero-tariff policy on car imports from the two economic blocs. However, the market sentiment was conditioned by the instability experienced in emerging markets, after the recent and strong devaluation of the Argentine Peso and the Turkish Lira. On the macroeconomic front, the PMI index for manufacturing activity in August fell from 55.1 to 54.6, the low of the last 21 months.

 The US market was closed today to commemorate the Labor Day.

Stock Markets – Closing Note – 31 Aug

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

The delicate situation of some emerging markets has once again put pressure on the markets of the Old Continent. The delicate phase that crosses Argentina and Turkey has generated turbulence in the exchange markets and by reflex in the financial markets as a whole. This instability has led to an escape of foreign capital from these countries, a move that further pressures their respective currencies. To counter this trend, the Central Bank of Argentina raised interest rates to 60%, thus trying to attract a very high interest rate to some of that foreign capital. However, high interest rates aggravate the debt burden of private individuals and domestic firms and discourage investment. In this context, a strong risk aversion was generated in Europe, which penalized the stocks of companies with greater exposure to emerging markets.

The vicissitudes of European and emerging markets were not causing great fears on Wall Street. Even the news published by Bloomberg on thursday appeared to have a temporary impact on American markets. This information agency mentioned that the Trump Administration would be studying the implementation of additional tariffs on 200 000 M.USD of imports from China. Bloomberg also refferred that the President had not yet made a final decision on the matter.

Stock Markets – Closing Note – 30 Aug

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

European indices have today been the target of investors’ fears about emerging markets. The situation in Turkey is beginning to show signs of fragility. Yesterday, economic confidence hit the lows since March 2009 (in the midst of the global financial crisis), which led to a further decline in the Turkish Lira against the US Dollar. In the last 3 days, the Turkish currency depreciated by 6% against the US Dollar. Meanwhile in Argentina, Peso lost 8.15% even after President Macri announced that he was negotiating with the IMF on a loan of 50,000 M.USD, which should offset the country’s current inability to fund intentional markets. Since the beginning of the year, Argentino lost 45% of its value against the US Dollar. These two events, although uncorrelated, focused mainly on the securities most exposed to these two economies. In this sense, as Spanish banks BBVA and Santander, as well as Telefónica were particularly targeted by investor sales.

The vicissitudes of European and emerging markets were having a limited impact on Wall Street. At the economic level, data on household income and expenditure as well as inflation associated with it were in line with economists’ forecasts. Household expenditures increased 0.40% in July compared to the previous month (in line with forecasts) while income rose 0.30% (marginally below the estimated 0.40%). But the most relevant figure was inflation associated with household expenditure, the Fed’s preferred price level indicator. In its core version (which excludes goods with more volatile prices) stood at 2% in annual terms.

Stock Markets – Closing Note – 29 Aug

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

European indices did not mark today a definite trend. The session was relatively quiet, with no big news, with investors taking advantage of the latest events (last week’s intervention by the President of the Fed and the recent agreement reached between the US and Mexico). Thus, the session was under low volatility and volume below the average observed in August. Perhaps the only note of note was news reported by the Italian newspaper La Stampa. This newspaper reported that the Italian Government would be promoting contacts with the ECB, so that this institution could set up an Italian debt purchase plan if Italian yields started to rise sharply. Italian stocks managed to recover slightly and in the bond market, transalpine yields retreated slightly. In the debt market there has been growing nervousness over the elaboration of the State Budget, which is feared to be in conflict with European rules.

The US market traded on contained gains. The economic data that were published were relevant but failed to spur a consistent rise in the US market. The Commerce Department revealed in its second estimate that GDP in the second quarter grew 4.20%, more than the 4.10% initially estimated, representing the highest quarterly growth since 2014. The slight inflection of private consumption over the previous estimate (3.80% vs. 4%) was more than offset by investment and inventories. GDP-related inflation stood at 3%.

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Stock Markets – Daily Note – 28 Aug

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

In the pre-opening, the indices of the Old Continent presented some valuations. European markets are the scene of opposing factors. On the one hand, the performance of the American indices is a favorable force given the high correlation between markets on both sides of the Atlantic. In fact, in the last two years, all the upward movements of European stocks were preceded by rallies on Wall Street. On the other hand, the Turkish Lira lost about 4% against the Dollar on the day it returned to trading in Turkey after some religious holidays. Tensions between Brussels and Rome pose a major threat to stock markets. During the weekend, the Government of Rome decided to anticipate the hostilities with Brussels threatening not to contribute to the next Budget of the European Union, due to the fact that the European authorities did not comply with the agreements established with regard to the immigrants who flock to the Italian coasts . As a result, investors will continue to monitor Italian yields, and if 10-year Italian interest rates exceed 3.20% (currently trading at 3.14%) then their rise may gain momentum and may penalize European markets.

US indexes closed again higher. The main catalysts of yesterday’s rally were the aftermath of Jerome Powell’s words at the Fed’s Annual Forum and the agreement reached by the US and Mexico under NAFTA. Another catalyst for the rise was the agreement reached by Mexico and the US, something investors had already anticipated. The main difference between the two countries was a clause that the Trump Administration wanted to introduce, which consisted of a renegotiation every 5 years of the NAFTA treaty, with the possibility that this free zone would disintegrate if no agreement was reached. The solution found was that the agreement concluded yesterday will be valid for 16 years but will be reviewed every 6 years. This bilateral understanding will be proposed to Canada. At first glance, the former head of the Canadian delegation to the NAFTA talks was in favor of the guidelines of this agreement. In this context, the stocks of the large American multinationals, which have been the most sensitive to the US customs policy issue, such as Boeing and Caterpillar, have achieved significant gains.

Asian markets closed without major fluctuations. Although US events have been positive and could have had a beneficial effect on the Asian stock markets, it is important to consider that at yesterday’s session, these markets had recorded fairly strong gains. Investors therefore preferred to make some profit taking rather than continue to increase their exposure to equity markets. Even in this context, there was an overperformance of the export sector, justified by the agreement reached by the US and Mexico.

Stock Markets – Closing Note – 27 Aug

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

European indexes closed higher, mirroring the rise in Asian markets and later US stock markets. World markets were thus boosted by the words from the President of the Fed in the Annual Forum of this institution, on Friday. Briefly, Jerome Powell argued that the economy remains “strong” and that it can cope with the process of normalization of monetary policy. However, the phrase that spurred the rise of stock markets was that “he does not believe that inflation rises substantially above 2% (official objective of the Central Bank) so that the increases in the rates of interest should be gradual.” In this context, the risk appetite, which had already been marked last week, has been strengthened. The exception to this very positive picture was the Milan Stock Exchange. Over the weekend, the Government of Rome decided to anticipate the hostilities with Brussels, threatening not to contribute to the next European Union budget because the European authorities failed to comply with the agreements reached with regard to immigrants who flock to the Italian coast. At the macroeconomic level, the publication of the IFO index, which measures the confidence of German businessmen, reached 103.8 in August, above economists’ estimates.

The US market was trading higher, with S&P and Nasdaq reaching new all-time highs. Investors’ decisions were still being influenced by Friday’s words from the President of the Fed and the agreement reached by the US and Mexico. During the weekend, a head of the Mexican delegation had advanced that the negotiations were going well and today an agreement between the two countries was announced. Now the talks will extend to the other NAFTA member, Canada.

Stock Markets – Closing Note – 17 Aug

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

European markets ended lower in the last day of the week, under pressure from the continuing fears and uncertainties associated with the situation in Turkey and the trade relations between the US and China. The banking sector, given the exposure of some institutions to Turkey, led the losses, while the technology sector was penalized by the news about the North-American company “Applied Materials”. In Paris, Air France-KLM devalued 3.54%, after confirmation of Benjamin Smith as new CEO. On the Eurozone, Eurostat reported that inflation in the region reached 2.10% in July, one tenth higher than in June and the highest since December 2012. In the European Union as a whole, inflation stood at 2.20 %, also a maximum since December 2012.

Wall Street returned to negative territory after gains yesterday and despite the news on resuming US-China talks scheduled for next week. At stake was a further fall of the Turkish Lira against the Dollar after the Secretary of the Treasury Steven Mnuchin said that Donald Trump has confirmed in a tweet that he will continue to issue economic sanctions on Turkey until the US pastor is released. In addition, the semiconductor industry was pushing stock indexes. Applied Materials has projected results for the current quarter lower than analysts’ expectations. Shares of the world’s largest supplier of chip equipment lost more than 6 percent. Nvidia also reported quarterly revenue short of analysts’ estimates and said demand for crypto products was down sharply, with sales forecast for the current quarter below average estimates of market consensus. As a result, the titles of some of the top technology companies, such as Facebook, Amazon, Netflix and Alphabet, traded on a downward trajectory. Tesla declined about 8% after confirmation that the company faces an investigation by the US stock market regulator following the tweet sent by CEO Elon Musk about his intention for taking the company private. In terms of economic indicators, the consumer confidence indicator, measured by the University of Michigan, fell in August to 95.3, lower than the 97.9 in July and the estimated 98.5.

Stock Markets – Closing Note – 16 Aug

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

European markets have recouped some of the losses recorded in recent days, given some relief over the crisis in Turkey and the US-China trade war. Encouraging the most positive sentiment from investors came the news that China accepted the US invitation to visit the country later this month to negotiate bilateral trade issues, as well as the announcement yesterday of Qatar’s financial support it promised to invest 15 000 M.USD in Turkey. For more specific securities, shares of JCDecaux rose 7.14%, after the improvement of recommendation to buy from a German investment house, Berenberg. In the negative, it was Bayer which devalued 4.80% in response to a cut in his recommendation.

Wall Street traded on a rising trend in the face of a rebound in US-China talks. Companies exposed to global trade, such as Boeing and Caterpillar, valued more than 1%. Remember that much of the revenue from both companies is obtained outside the US, so their stocks become quite sensitive to news and events related to global trade. In addition, Walmart’s results were well received by investors, providing gains to their securities (10%). The retailer announced a 40% increase in online sales in the US during the second quarter, after the previous three months increased 33%. Revenues, payable sales and profit surpassed expectations. Earnings per share hit 1.29 USD, up from the estimated 1.22 USD. The company said it is now expecting 2% growth in sales in the fiscal year 2019, compared to 1.50% and 2% previously estimated. Best Buy also valued after announcing that it will acquire GreatCall pharmaceutical services company for 800 M.USD. In this way, the retail sector recovered from the losses observed yesterday, due to the negative performance of Macy’s, whose results disappointed the investors. Still, limiting gains from the retail sector was J.C. Penney’s, which lost more than 20% after having reported a higher than expected loss, and also reduced its future outlook. Dow Jones was up more than 1 percent, with Walmart and Cisco leading the gains. Cisco also reported results above the estimates, which allowed a stock gain of more than 3%. The results were favored by the revenues obtained in the internet and application security segments. EPS stood at 0.70 USD, up from the estimated 0.69 USD.