During this week, European investors will follow the publication of the results of US companies as well as first quarterly accounts that European companies will present. Mining shares may trade under some pressure because of the fall in the price of various metals such as gold, silver and palladium. Banks shares, such as Barclays and Standard Chartered, may negotiate with a larger volume than normal. The English newspapers announced that Barclays will decrease the number of employees, while the Standered Chartered revealed it would announce restructuring measures in order to reduce costs.
The source for the recent weakness of the raw materials is related to the oil price drop (which often anticipates the cycles of other commodities) justified by the intention of Iran to increase production by 2 million barrels, the recent rise in dollar and by ongoing evidence of a slowdown in China’s economy.
FTSE 100 remains under downside pressure. Starting with the FTSE 100, Mir notes that the 50D MA sits at 6850 is providing massive resistance and spot is currently trading at 6710, below the 200D MA too. He sees a big risk of a final probe to 6500. He describes price action as very messy and can foresee volatile trading on either side of the 200D MA ahead. Moving to the NASDAQ, Mir notes that it isn’t looking pretty after Apples fall with lots of gaps to the downside that need to be filled and can see a pull back towards 4,600. He feels it looks overstretched in general. Mir adds that the S&P500 is more sedate and a risk of a dip to the 50D MA around 2,102.
On the 14th of July after the agreement between Greece and its creditors, there was the question of the impact of this understanding in the equity markets. Before Greece forcibly take the leading role (in late April), the DAX traded between 11800 and 11900. The day before yesterday, the DAX index reached these levels. European markets perhaps need new catalysts to allow them to approach to the maximum of the year. Among these possible factors include a renewed depreciation of the Euro, the continued improvement in the economic situation in the region, the good business results, etc.
US markets closed lower, penalized by the disappointing results of some leading companies such as Microsoft, Yahoo! and Apple. It was the latter company to condition investor sentiment, given its influence on the activity of several technology companies. Still, the market managed to contain the impact of the fall in shares of Apple (-4.23%). Microsoft’s shares fell 3.68% and Yahoo’s fell 1.23%. Despite the disappointing results of these companies, most US companies continues to exceed analysts’ forecasts. Yesterday, before the opening, Coca-Cola, Boeing, EMC and Campbell Soup announced results that beat estimates. At the macroeconomic level, the real estate market continues to give momentum signals. In June, sales of existing homes hit the 5.49 million units (annualized number), which corresponds to the maximum of the last eight and a half years. This exceeded the estimates of economists, confirming that the housing market is in an expansion phase and can benefit from higher wages, greater availability of credit but assuming that credit rates to housing remain unchanged. Today, it is one of the most intense days of the earnings season with about 50 companies in the S & P500 to report their quarterly accounts. At a time when some uncertainties remain in the global economy (due to the slowdown of the Chinese economy, the crisis of some emerging economies and the still modest recovery in the Eurozone), the results of Caterpillar and 3M may give important clues about this matter. These companies have a high exposure, exporting their products to all over the globe and in the case of 3M, its product range is so wide (about 55,000), that its activity is a reliable sample of the worldwide industry.
The European indices started the session with some gains. The session will again be dominated by the presentation of results on both sides of the Atlantic. Good numbers from Amazon may give some encouragement to the European technology sector. The mining sector may continue to register a underperformance due to the selling pressure on the commodities that has characterized the Asian sessions. In addition, Anglo American reported a 30% fall in half-yearly profits, trying to compensate shareholders by paying a dividend of 0.32 GBP. To these factors must be added the warning signs of the Chinese economy. Air France reported a higher profit than expected, keeping the projections for 2015. Danone announced a result roughly in line with the anticipated but sales growth was stronger than expected. In turn, BASF announced an EBIT that was lower than expected. Banco Sabadell announced profits that topped forecasts.
FTSE 100 – Short-term bullish potential 4-hourly charts, notes that momentum is leading price action. further maintains a bullish outlook on that basis. Looking at the daily charts, see short-term bullish potential for the footsie for today and early next week.
FTSE 100 to test downside, below 6750. He continues by adding the warning of another test of the 6450/6500 level.
Investor sentiment was influenced by company results and also the weakness of commodities. Conditioning the markets were some leading companies like Apple, 3M, Microsoft (among others) which presented disappointing sales, the very cautious outlook for some companies in the future, profits not based on increased sales but repurchase programs of own shares and cost cuts. The fall in the price of raw materials has not only an impact on the producing economies (such as Brazil, Australia and South Africa) as signals that economic activity in the consuming economies (notably China and other countries Asian) is slowing. Investor’s fears were reinforced on Friday with the release of China’s PMI index, which showed an unexpected decrease, remaining in a contraction phase. To the hypothetical weakness of some economies power up the strength of the US dollar which reduces the value of earnings generated in foreign markets. Despite macroeconomic concerns, the data that were released during the session had a diminished role in the course of the main indices. Sales of new homes fell by 6.80% in June to 482,000, the slower pace of the last 7 months. Predictions were for 550,000.
The present situation confirms the evidence of slowdown in China and the stagnation of some emerging economies such as Brazil and South Africa. The copper (copper), whose cycles anticipate with some precision the economic cycles, lost 26% in the last 12 months. In this context, the US economy appears as an oasis. Orders for durable goods grew by 3.40% in June, exceeding the 3% estimated by economists. This indicator is strongly influenced by aircraft orders. In June, Boeing received an order for 161 planes, after the Air Festival of Paris-Le Bourget. In May, orders were only 11. The recent losses in the mining and industrial sectors, encouraged by the fall in the price of raw materials and the instability of Chinese financial markets, led these sectors to extreme of oversold levels.
The lower volatility of Asian markets boosted US equities. The rally was led by the mining and oil sectors, which had been the most penalized by falls in Chinese stock markets and commodities. The rise may also have been influenced by the closure of vendors positions by the so-called fast money (short-term investors) before the meeting of the Fed.
S&P questioned over 2050 level
Mir outlines how the S&P 500 is once again unwinding down towards the floor of its sixth month range, and if it was to break the floor we could a downside moving to 1950/1980. Mir noted the problems breaking this floor could bring, but the S&P has bounced from the floor before and the index is expected to bounce back again. S&P faces massive dispersion across sectors Ingram noted the variation of numbers across the S&P sectors, highlighting the healthcare YTD standing at +9.1%, and the Mining and Metals Index YTD, seen to be at -35.4%. Impact of China on the S&P When Mir posed whether China was a factor or a new leg down for the S&P, Ingram replied that he believed China to be a new leg down lower, with the commodity squeeze being so bad, he believes it is impacting the commodity stock cash flow.
European stock markets were higher at close of trade on Wednesday as stability could be seen in Chinese markets after prior sessions’ broad selloff while investors remained vigilant to FOMC statement. Besides this, Net lending to individuals and households in the U.K exceeded expectations, which shows that there is stronger demand for credit in Britain. Taking cue from stock futures, European markets are expected to open at slightly negative note today. The resistance level for DAX is 11287.77 and its support level stands at 11056.40. The resistance level for FTSE 100 is at 6680.55 and its support level is at 6520.98. DAX and FTSE 100 jumped by 0.34% and 1.16% to 11,211.85 and 6,631.00 respectively.
The Fed was sparse in nominations and no major changes from the previous meeting. The Central Bank says that the economy continues to grow moderately, recognizing the improvements seen in private consumption and the housing market. With regard to the labor market, a key part of monetary policy at the current juncture, the Fed brought greater focus to define how solid progress as well as reducing the unemployment rate. Only to exports and investment the statement pointed to some slowdown. Inflation remains away from the long-term objective (2%) due to falling fuel prices and some imported goods. By failing to provide clear indications, the Fed set aside some room for maneuver in relation to the time it decides to normalize interest rates. A rise in interest rates until December is assigned a probability of 57%. Until January this probability rises to 74%. These expectations contrast with the opinion of 80% of the economists, who before the meeting, expected an increase in rates already without September. After bending 0.20% observed in Q1 (the result of some non-recurring factors), economists estimate that GDP grew 2.50% in the 2nd quarter. This period is a kind of antechamber of the 2nd half, when the Fed estimates an acceleration of the economy.
US markets ended without major fluctuations, with the session to be marked by macro and micro-economic factors. The publication of yesterday’s economic data confirmed the Fed’s optimistic view on the US economy.
U.S stock markets dropped on Friday due to fall in energy stocks owing to declines in crude prices amid oversupply concerns. Dow Jones Industrial Average declined by 0.31% to 17,690.46; S&P 500 by 0.22% to 2,103.92 and NASDAQ by 0.01% to 2,103.92. Investors are eying Payroll data and Unemployment rate data to be released at the end of this week as Fed chair Janet Yellen indicated that “some” improvement in job market is needed to hike interest rates in U.S. Besides this, the important data releases of the day which may drive stocks markets include ISM Manufacturing PMI (Jul), ISM Prices Paid (Jul) and Personal Income (MoM) (Jun). Technically, S&P 500 is trading in consolidation in the range of 2043.5 to 2131.5 since last six months. The break out on either side will guide the market’s direction.
The most cyclical sectors may present a under-performance due to disappointing data in China. During the European debt crisis, the Chinese market was an important rewarding element for many European companies which in the domestic market were penalized by the economic downturn. Today, the Greek Stock Exchange will reopen after being closed for more than a month. Marked losses are foreseen at an early stage. Since the closing of the Athens stock exchange, an ETF, listed in New York and that replicates the largest Greek companies, lost 17%.
Nick Batsford, CEO of Tip TV, was joined by Manoj Ladwa, Head of Trading at TJM Partners this morning to take a look at the trending topics in the market. S&P 500 consolidating? Looking at the S&P 500, Batsford noted that the index is consolidating its reassertion efforts, and momentum wise, the 14 RSI is taking a healthy breather around neutral. Fed rate hike to pressure equities Ladwa added that he feels it could break through its 20D MA after a prolonged period of testing. He is looking for a number of constituents to go push higher, but suspects that with focus on a rate hike intensifying, so does the prospects of a break lower. HSBC to leave South America With HSBC’s pre-tax profits being up £1 billion, after noting the neutral rating given to HSBC by Nomura, Ladwa notes that HSBC plans to offload its Brazilian business which is their principle arm in South America. He adds that this comes as a result of the slowdown in commodities and changing currency dynamics, and sees the bank valuing this arm of the business at around $5.2 billion. - See more at: S&P 500 due a correction? HSBC looking to offload Brazilian business on commodity woes | TipTV.co.uk
European stock markets were mixed at close of trade on Monday. The stronger than expected Manufacturing PMI data for Germany and entire Euro zone led the stock markets higher. U.K’s manufacturing Index also showed better than anticipated results but still remained close to previous month’s 2-year low. Britain’s New export orders declined for the fourth straight month in July, mainly as a result of the sterling-euro exchange rate hitting competitiveness in euro zone markets. This has further exacerbated the situation and resulted in slowing down of growth rate in new orders in Britain to a 10-month low. Taking cue from stock futures, European stock markets are expected to open at flattish to slightly negative note today. Plus, Investors will look ahead to PMI Construction (Jun) for Britain to be released today. The resistance level for DAX stands at 11569 and its support to see is at 11310. The resistance level for FTSE 100 is at 6710 and its support level is at 6625. DAX closed higher by 1.19% to 11,443.72 and FTSE 100 dropped by meager 0.11% to 6,688.62.
Greek stocks have lost more than 85 percent of their value since 2007. The nation’s benchmark gauge closed at its lowest level since September 2012 on Monday.