Dax30 ftse100 sp500 - market-view

In the pre-opening, the European markets negotiated in positive territory. The influence of the markets should be the agreement on Greece, while political developments, especially in France, should return to attract attention, since on Sunday is the second round of the elections to Parliament. Meanwhile, oil prices are close to the low of the last six months, in the face of continued fears of over-production and despite OPEC’s efforts to reduce supply. The final estimate of inflation in the Euro Zone for May will be published today, which should confirm a correction of 1.90% to 1.40%, due to the general fall in prices in the main countries of the region. It should be recalled that price behavior will be decisive in shaping market expectations regarding the ECB’s monetary policy.

Oil dropped to the lowest level in seven months, pulling energy stocks down, amid growing concerns that OPEC-led output cuts are failing to ease a global supply glut.

After a long wait, Chinese equities will finally be part of the MSCI Emerging Markets Index. Thus, 222 listed companies in China will integrate this index which is the benchmark for many international fund managers. It is important to note that China already had a weight (26%) in the MSCI Emerging Markets through companies listed on the Hong Kong stock exchange.

The European stock indexes ended without major fluctuations, although they traded most of the day in negative territory.

Attention will now be focused on the behavior of oil and developments in Washington regarding the discussion of the new health system law.

Asian markets closed higher, led by oil companies. In addition, there was a purchase of the sectors that had been penalized the most last week. It should be noted that several markets, such as Indonesia, Singapore, Malaysia, India and the Philippines, were closed because of the end of Ramadan.

Asian markets do not present a common trend. Unlike yesterday, the appreciation of oil could not trigger a sustainable rise.

Hedge funds have in recent weeks accumulated selling positions (supposedly equivalent to 162 million barrels) and have been one of the main causes of the fall in crude.

Oil has prolonged its recent rise, even in the face of the release of energy reserves by the Department of Energy. Oil stocks increased by 118,000 barrels last week, compared to forecasts of a drop of 2.1 million barrels. Gasoline inventories fell by 894 thousand barrels, compared to an expected decrease of about 288 thousand barrels. From a technical point of view, Brent is faced with a zone of resistance formed by the 48.33 / 49.15 levels.

Yesterday, the DAX broke the support formed by the area of ​​12490/12500, which constituted a relevant short / medium technical barrier. It is important to emphasize that in the last 12 months, the stock markets have not suffered any corrections worth noting. The only falls that deserve mention were the ones that followed Brexit and the election of Donald Trump but lasted only a few hours. So if S & P, which we consider to be the leading index of world markets, start trading below 2419 then the likelihood of a larger correction than witnessed in recent months will begin to be significant.

Asian markets closed with contained variance, despite the positive news coming from the Chinese economy. In June, the Caixin PMI index reached 50.4, above the estimated 49.4 and 50.0, which separates a cycle of expansion from a contraction cycle. Unlike the official PMI index prepared by the state authorities, the Caixin PMI index, calculated by a private institution, is compiled through surveys of small and medium private enterprises. These companies are more representative of the more dynamic areas of the Chinese economy than the large state-owned enterprises, which are at the heart of the official PMI index.

Gold is at a critical level and is about to test the 200 week moving average, the last stand of the bulls, plus it is also aligned with the upward trend line.

During the past month, car sales in the US fell 3%, being the 6th consecutive monthly decline. Sales of Fiat Chrysler fell 7.40%, Ford’s 5%, General Motors 4.70% and those of Korea’s Hyundai-Kia decreased 15%. On the contrary, sales of Nissan, Toyota and Honda showed slight increases in sales, although these were not enough to offset the falls in Detroit (which remains the heart of the American automotive industry). Volkswagen sales grew 11% year-on-year, when the level of sales was very low, although this increase fell short of estimates.

Asian markets closed mostly with modest losses. The fall of oil and the rise of yields in most of the countries of this region. In Japan, 30-year yields peaked in the last 4 months (0.883%). However, the political situation on the Korean peninsula continues to generate some concern. Following the launch of a supposedly intercontinental missile by North Korea, the US and South Korea carried out several exercises that involved the launching of missiles, and the US ambassador to the UN admitted using force to stop North Korea’s nuclear program.

Asian markets closed with contained losses, with the exception of the Shanghai stock exchange which ended in a slight rise. The fall of oil and the rise in yields were the themes of the session. In Japan, news circulated that the Central Bank intervened in the debt market, acquiring bonds, in order to halt the sharp rise in yields.

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 the pre-opening, the European indices traded with contained variations. Although the sentiment is relatively neutral, signals from the debt market are somewhat worrisome. German bond yields were trading above 0.60%, prolonging the rise initiated after the break of the 0.50% technical barrier. Now, institutional investors are carefully monitoring Italian 10-year yields, which trade today at 2.29%.

The effects of Janet Yellen’s words continued until the opening of the European session, which was moderately positive. If European equities could continue to benefit from the greater risk appetite of investors, this effect seems to have faded in the debt market. Following yesterday’s intervention by Janet Yellen, European bond yields, as well as their US counterparts, fell back. However, a part of this retreat was lost in the first minutes of today’s session. While German yields remain at levels above 0.50%, investors will continue to monitor, with concern, the behavior of interest rates in Europe.

In the pre-opening, the indices of the Old Continent did not show a definite trend. Today’s session should be divided into two parts. The first, in the morning, should be characterized by some tranquility with investors following the trend of state yields. The second part of the session will begin with the publication of the results of US banks and the spread of inflation in the US. The latter figure is expected to have an impact on European yields and consequently on the stocks of the Old Continent. Debt markets are highly interdependent, so an increase in yields in the US (if the consumer price index indicates higher inflation) will have an impact on European debt interest rates, which in turn will have an impact stocks in this region. The evolution of yields, more precisely, the differential between US and European interest rates, has been one of the variables that has conditioned the Euro / Dollar exchange rate. In recent weeks, the Euro has appreciated not only against the Dollar, which began to weigh on the European export sector. Today, it was reported that sales in Europe grew only 2.10% in June (compared to June 2016). The country with the highest growth was Italy, which contrasts with the falls in Germany and the United Kingdom. In the latter country, uncertainty over Brexit and the devaluation of Libra (which makes imported vehicles more expensive) has inhibited buyers. The strongest brands were Toyota (+ 13% of sales) and Fiat (+ 7.90%).

In the pre-opening, the European indices traded with some gains. In an early stage, the good performance of Wall Street should boost European markets. However, this momentum should be limited by the strength of the Euro. At a time when the Euro appreciates sharply against the US dollar, European markets tend to underperformance with their US counterparts. Despite the dynamism of domestic consumption and investment, European companies continue to have high exposure to external markets. In these economies, many of them going through a less dynamic phase (such as China and on a larger scale to Brazil), the companies of the Old Continent face strong competition from American and Asian companies. The strength of the Euro exacerbates the competitiveness of these companies and also decreases the value of revenues and profits generated there.