In the current context of deteriorating economic conditions in Turkey, the US market had slight losses. The technology sector was off the rule, with some gains.
Yestrerday the Turkish President defended a retaliation against Washington for the worsening of the tariffs applied to imports of aluminum and steel coming from Turkey: Recep Tayyip Erdogan threatened to boycott the US electronic products, including the iPhone.
benchmarks fell led by the Nasdaq 100 Index. Crude oil rebounded after slipping below $65 a barrel following a report that American stockpiles rose the most since March 2017.
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.
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.
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.
The performance of the American indices is a favorable force to European markets 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.
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.
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 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.
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.
The day was negative for most European markets, in a general context marked by fears about the situation in emerging markets and trade tensions between the US and China. Just like yesterday, automakers were among the worst performers, after over the weekend President Donald Trump said he was prepared to impose additional charges worth 200,000 M.USD on imports from China. Also on the sector weighed the deadlock that is marking the trade talks between the EU and the US, which are centered on the automotive industry.
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.
Stock Markets – Closing Note – 6 Sep
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
The trend of European markets in today’s session was negative. Pressure from emerging markets as well as fears about US-China customs tariffs remain the main reasons for investors’ increased risk aversion. Leading the losses were the technology sector, reflecting the behavior of US counterparts, and producers of raw materials. Above all, at this moment investors are questioning the future of emerging markets, including Argentina. Yesterday, members of the Government said they were confident about the new agreement with the IMF. However, issues related to Brexit remain as background. The German Government has stated that it is prepared for any scenario, including that of a “no-deal”. The London Stock Exchange ended today with a loss of 0.91%.
The US market was trading lower, with tech companies’ performance negatively impacting the Nasdaq. Highlighting the losses of Amazon and Apple, as well as chip makers, such as Micron Technology. In terms of economic indicators, the ADP employment report showed that 163 000 jobs were created during August, an increase below the expected 200 000. Still on the labor market, the number of weekly applications for unemployment benefits reached 203 000, lower than the estimated 213 000. On the other hand, factory orders decreased 0.80% in July, after two months of increases and against an expected fall of 0.60%. On the other hand, orders for durable goods decreased 1.70% in July, in line with expectations. The ISM index for the services sector stood at 58.5 in August, compared to the previous 55.7 and the forecast 56.8.
Stock Markets – Closing Note – 7 Sep
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
Most European stock markets closed lower. Investor sentiment has remained conditioned by threats to trade relations between the US and its main partners (European Union, Canada and China). The banking sector remained under pressure. Deutsche Bank shares fell 1.48%, after news that the Chinese group HNA intends to sell its 7.60% stake. On the other hand, IAG’s stocks have come down, in reaction to the British Airways statement that a computer-based attack, lasting several days, will have affected 380,000 cards. On the macroeconomic front, Eurostat reported today that the economies of the Eurozone and the European Union grew 2.10% in the second quarter, after 2.10% in the first three months of the year. Compared to the previous quarter, GDP in the Euro Zone and in the EU rose 0.40%.
Wall Street traded slightly without a definite trend, in a session marked by investor reaction to economic data at a time of uncertainty hanging over the US trade negotiations. In terms of economic indicators, the most awaited indicator of the day and week was the employment report, known today before the opening of the session. This publication has raised renewed fears about the conduct of monetary policy by the FED. During August, the US economy created 201,000 jobs, up from 190,000 expected and 157,000 in July, reflecting a growing economy that showed no signs of slowing down during the summer season. The annualized unemployment rate (currently at the lowest of the last 18 years) was 3.90%, down from 3.80% in July, but in line with expectations. But the biggest surprise came from wages, since it was observed in August a monthly increase of 0.40%, higher than the 0.20% forecast and the previous 0.30%. Year-on-year, the increase was 2.90% for the highest since June 2009.
Stock Markets – Closing Note – 10 Sep
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
Today European stock markets ended positive. The banking sector led the gains, and such performance stood out in the Italian market. Intesa, Unicredit and Banco BPM rose more than 5%. In fact, as a reflection of recent days, several members of the Government of Rome expressed their intention to comply with the Community budgetary rules, the Italian stock market showed a relative overperformance, having registered a valuation of more than 2% and the yields of OT to keep up to a minimum of one month. In the political arena, investors also reacted today to the election results in Sweden and developments related to Brexit.
The US stock exchange started the week on a positive note, with shares of tech companies recovering from losses last week. Even so, attention remains focused on US-China trade relations, after Friday, Donald Trump raised the possibility of applying additional tariffs on Chinese products worth 267 M.USD. However, the US president said that Apple should change its production to the US to avoid being hit by customs tariffs imposed on Chinese imports.
Stock Markets – Closing Note – 11 Sep
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European markets have traded slightly today, with most sectors down. The sentiment was conditioned by confirmation by the World Trade Organization that it will respond to China’s request for the country to obtain permission to impose sanctions against the US for failing to comply with anti-dumping measures of the international entity. Thus, in face of investors’ concerns about the relations between these two countries, commodity producers ended up leading losses in sectoral terms, with a depreciation of around 1%. ArcelorMittal fell 1.98% after news of rising its bid to buy Essar Steel. On the other hand, Apple’s suppliers (such as STMicroelectronics) were penalized by the statements of the American President. Donald Trump said that the technology company is being hampered by the tariffs imposed on Chinese imports. Meanwhile, oil prices in the United States rose to levels close to $ 68 a barrel in face of mounting fears about the hurricane approaching the US East Coast that could condition production of this raw material. In terms of economic indicators, in Germany, the ZEW sentiment index of financial agents was better than expected, as it stood at -10.6 in September, compared to the -13.0 expected.
The US market reversed to positive ground after starting lower in today’s session. At stake was the performance of the technology sector.
Stock Markets – Closing Note – 12 Sep
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European stock markets closed higher, with most sectors of activity on positive ground. The oil companies were among the best performers, due to the rise in the price of crude oil. On the other hand, in the retail sector, the Spanish Inditex increased 4.11%. After having presented the lowest revenue growth in the last 4 years for the first half of the year, the retailer expects that sales growth will accelerate and that there will be an improvement in profit in the second quarter. In the first six months of the year, the company recorded sales of € 12030 M., compared to estimates of 12060 M.€ and a net profit of 1410 M.€, in line with forecasts. Contrary to the general trend of the markets were the companies of the technological sector and the utilities. In Frankfurt, Deutsche Bank and Commerzbank devalued, after the German magazine Der Spiegel has advanced that the two institutions are increasingly available for a merger. However, Commerzbank CEO Martin Zielke prefers to do the operation “today than tomorrow”, while the head of Deutsche Bank has reported internally that this transaction is not on the agenda for the next 18 months.
The US market traded lower, pressured by falling stocks of chip makers. In fact, the technology sector, and more precisely the titles of the semiconductor companies lost ground, the day that Apple will present a new series of products. Despite the secrecy that usually surrounds this presentation, some rumors are already circulating in computer environments. The company is due to introduce a new range of iPhones inspired by the iPhone X. The new iPhones are supposed to be bigger and the screen should cover one of the faces of the new device. One of the biggest unknowns of these new products will be its price. In the last quarter, iPhones revenue growth was almost exclusively due to price increases, as sales only increased by 1%. Now analysts and investors are wondering if the new models will cost more than $ 1,000, the price of iPhone X. In addition, Apple will unveil new versions of MacBook Air, Mac Mini, iPad and Apple Watch.
Stock Markets – Closing Note – 13 Sep
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European markets finished higher on a day marked by the meetings of the Central Banks of Turkey, ECB and England. Producers of raw materials and car manufacturers have benefited from the prospect of renewed talks between the US and China. On the other hand, the technology sector reacted positively to the presentation of new products by Apple. Meanwhile, the price of oil corrected today from the highs of May, after surpassing the 80 USD, due to the possible impact of Hurricane Florence on the North American production. The storm has slowed down and is now in Category 2, thus lowering the impact on barrel production. As expected, the ECB decided to keep the key interest rates unchanged and reiterated its intention to end the asset purchase program later this year. The statement said that the ECB “expects the ECB’s key interest rates to remain at current levels, at least until the summer of 2019.” At the press conference after the board meeting, Mario Draghi said he has decided to revise his projections for Eurozone growth downward, pointing to increased protectionism and financial market volatility as factors that may weigh on the performance of economy of the region. Mario Draghi kept inflation forecasts at 1.70% between this year and 2020, but cut the growth projections for this year from 2.10% to 2.00%. For 2019, it lowered the forecast of 1.90%, to 1.80%, maintaining only the growth projection for 2020 at 1.70%. Another meeting that caught the attention of investors was that of the Central Bank of Turkey which raised interest rates from 17.75% to 24%. Consequently, the Turkish Lira appreciated significantly against the Dollar. This was a decision that exceeded market forecasts. On the other hand, the Bank of England also decided to keep the principal interest rates at 0.75%.
The US market traded higher, although President Trump said in a tweet that there is no rush to reach an agreement with China. In the business field, Apple was gaining ground, after yesterday the reaction to the presentation of the new products have not been positive. In macroeconomic terms, during August, inflation in annual terms increased 2.70% compared to 2.80% and 2.90% in the previous month. If we exclude the most volatile goods, the consumer price index rose by 2.20% compared to the expected 2.40%.
Stock Markets – Daily Note – 14 Sep
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European stocks rehearsed in high. Negotiations between the US and China remain a dominant theme and one of the main drivers of investor sentiment, which is currently looking forward to a possible resumption of talks between the two countries. Yesterday the session was dominated by the meetings of the ECB and the Central Bank of Turkey. The main points of the ECB meeting were:
• Interest rates should remain unchanged until and during the summer of 2019.
• Inflation uncertainty is declining and should follow a clear upward trend in the future.
• Despite the specter of a trade war and the turbulence experienced in emerging markets, the risks to the growth of the Euro Zone are contained.
• Projections for GDP growth in 2018 were reduced from 2.10% to 2% and 2019 from 1.90% to 1.80%.
• The ECB does not observe any contagion caused by the political and budgetary situation in Italy.
• The ECB has not yet begun to discuss whether and how it will reinvest the interest and repayments of the bonds it holds in the portfolio.
On the other hand, the Central Bank of Turkey increased the benchmark rates by 6.25% to 24%, an increase well above the 3.25% estimated by the economists’ average. At an early stage, this institution was able to achieve its objective: to stabilize the Turkish Lira and to restore the confidence of global investors who had previously been skeptical of the Central Bank’s reluctance to raise interest rates. Yesterday’s decision also signals the independence of this institution vis-à-vis President Erdogan, who has never concealed his hostility to the increase in benchmark rates. The reverse of the medal, namely the worsening of the debt burden of households and companies, should only materialize in the long term.