Dax30, Ftse100, SP500, Market View

In the pre-opening, the European markets were negotiating in different directions, after the attack that happened yesterday in Paris which aggravated an environment of quite uncertainty in two days of the presidential elections in the country, an event that has been accompanied by all Financial markets players. In fact, this election is highly uncertain given the complexity of the current situation and the fact that the polls point to four candidates with very close voting preferences. Last week saw an increase in put options on the Eurostoxx 50, signaling that several institutional investors have used these financial instruments to protect their portfolios from hypothetical adverse scenarios. In other words, several investors have already reduced their exposure to French assets, anticipating the occurrence of hypothetical unfavorable scenarios.

During the Asian session, the Euro reached a high of the last five months, favored by the increase of the degree of confidence regarding the victory of Macron, a defender of the European Union. In fact, for the second round, investors, supported by the vast majority of polls, estimate a comfortable victory for Emmanuel Macron, however, the occurrence of possible terrorist attacks could favor the rhetoric of the far-right candidate.

The US market also received positively the results of the French elections.
The financial sector was the leader in the S & P 500, while the Nasdaq Composite reached a record high.

The Nasdaq Composite index broke the 6,000-point barrier for the first time, 40 percent of which is influenced by five major companies (Amazon, Facebook, Netflix, Alphabet and Apple). In turn, the Dow Jones has temporarily outperformed 21,000 points, with Caterpillar and McDonald’s being the biggest catalyst for gains.

In the pre-opening, the European markets traded slightly lower. In addition to the business results, the day will be marked by the European Central Bank meeting. The Central Bank is expected to maintain the broad outlines of the latest releases, although it may not be possible to change some nuances in order to prepare the financial markets for a deeper modification of its message in the coming months when the ECB announces that it will stop with the measures of Liquidity generation. This scenario has already been discussed within the Central Bank, with the members of the Northern European countries advocating a faster monetary policy change, which contrasts with Mario Draghi’s more moderate stance and the other members of the Executive committee. Tomorrow will be known relevant economic data to the economy of the Euro Zone, such as inflation for April, as well as GDP in France and the United Kingdom.

Today will be published the first reading of the GDP of the first quarter of this year. The improvement in economic sentiment did not translate into a sharp increase in the real economy. The index of coincident economic indicators (whose denomination comes from the fact that their cycles coincide with those of the economy and as such a reliable sample) rose from 180.60 at the beginning of the year to 182.29 in March, a mere advance of 0.93%.

Many of the factors that influence performance, even among expert performers, are situational and not part of fixed personality traits. What we perceive and how we respond are greatly influenced by the environment. A full understanding of a trader’s performance requires an appreciation of the specific situation in which the performance was embedded.

The week shall be full not only of macroeconomic events (such as the Fed meeting and some economic indicators in the US and Europe) but also microeconomic (like business results) and political events (with the second round of presidential elections in France). In the political field, it should be noted that yesterday the heads of state and government of the European Union in Brussels adopted the guidelines for negotiations with London with a view to achieving the exit of the United Kingdom from the European Union. Today the PMI index for the manufacturing sector in the Euro Zone will be known.

If on one hand the theme of Brexit was once again the order of the day, on the other hand the approach of the second round of the French presidential elections (There is a televised debate between the two candidates Emmanuel Macron and Marine Le Pen) is also to be monitored. Regarding Brexit, some news reports say that Europe “seems to be divided” with France and Germany tightening their positions on the UK. According to a Financial Times analysis, the gross amount to be paid in advance by the United Kingdom may amount to € 100,000 M., an amount almost twice as high as the € 60,000 M. initially suggested by the President of the European Commission, Jean-Claude Juncker. The results published yesterday in the US by Apple could condition the actions of several European technology companies that are suppliers of the Cupertino company.

Most Asian markets closed lower, although the Japanese stock exchange was closed for a holiday (“Green Day”). Producers of raw materials reported losses due to falling metal prices following the publication of the PMI index for the manufacturing sector in China. This indicator dropped to 50.30, the lowest reading since September 2016, raising doubts about the growth of the country’s economy which is the world’s largest copper consumer.

Asian markets finished lower, with the Japanese being closed. Investors have responded to falling commodity prices and are awaiting the US employment report.

Yesterday, after the election results were known, the Euro appreciated against the Dollar for the highest level of the last 6 months and against the Yen for the highest value of the last year. The recent behavior of the markets already had discounted a victory of Macron, limiting now a further rally.

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Companies have exceeded forecasts because of revenue growth and not so much because of a cost-cutting program. On the other hand, analysts’ forecasts have been successively improved. In the case of the United Kingdom, the devaluation of the Pound and the rise of the prices of the raw materials will have been motors of the good performance achieved.

The energy sector led the gains of the S & P500, reflecting rising oil prices, after Iraq and Algeria joined Saudi Arabia to support an extension of production cuts by OPEC. In addition, US oil inventories declined more than expected. Despite this, this rise in the price of crude was not enough to recover from the losses recorded last week. The US Department of Energy reported today that weekly oil inventories fell by 5.2 million barrels, compared to estimated 1.9 million barrels. Inventories of gasoline fell by 150,000 barrels, compared with an expected increase of 65,400 barrels.

The rally unleashed by the result of the 1st round of the French presidential elections led the main European indices to extremes from the technical point of view. This condition coupled with the sharper drop in these indices yesterday, increases the likelihood of a short-term technical correction.

European markets were trading bullish, with investors outpacing the possible effects of the International Cyberattack of “WannaCry” virus, as well as the latest missile test in North Korea. In fact, the regional elections in Germany, as well as the prospects for an extension of the oil production cut by Russia and Saudi Arabia, contributed to the positive sentiment of the investors. An analysis by Bank of America Merrill Lynbch notes that investment in European equity markets has shown strong growth, but there is still room to recover further. In the US, the uncertainty that has recently surrounded the Trump Administration, particularly with regard to tax reform, has left investors with greater uncertainty.

In pre-opening, European markets were trading in different directions. The Earnings Season is nearing its end, but today investors will still have to react to the results released by Vodafone and EasyJet. On the other hand, macroeconomic information will also be in the spotlight, as well as the oil price behavior that has been closely monitored in recent days. Today will be known the advanced estimate for the GDP of the first quarter of the Euro Zone. The recently released indicators have shown a favorable momentum in the first months of the year in all the countries that share the Euro. The meeting between the French President Emmanuel Macron and the German Chancellor Angela Merkel resulted in a joint demonstration of the two concerning a possible revitalization of Franco-German relations, which have been the driving force of the various member states of the European Union. Angela Merkel expressed her openness to achieving measures that guarantee the future of the European Union.

In the pre-opening, the European markets traded lower. Political fears may once again condition investors’ decisions following news that US President Donald Trump has asked former FBI Director James Comey to close the investigation to Michael Flynn, who was an advisor to the President To National Security for about a month. All of these news have heightened concerns about Donald Trump’s ability to implement the announced program of measures, which includes tax reform and infrastructure spending, and has recently been one of the driving force behind stock markets.

Asian stock markets ended on negative territory in the face of mounting political uncertainties in the United States. The Dollar depreciated significantly against several currencies, having reached the minimum of the last six months against a set of some currencies. Despite OPEC’s efforts to curb overproduction, oil prices have fallen again.