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.