Dax 30; Ftse 100; SP 500 - Market View

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The first day of the week was negative for the European stock markets, justified by the negative sentiment that Donald Trump's announcement on the imposition of new customs duties against China. The automakers led the losses. Shares of Volkswagen fell 3.63% after news of the arrest of Audi executive director Rupert Stadler. The oil sector was the only sector to end up on the day the oil price mirrored a recovery in international markets. In Frankfurt, Thyssen Krupp depreciated 2.17%. The main shareholders of the German company were against the proposal of the administration to merge its steel production activity with India's Tata Steel.

 

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The escalation of fears and doubts about a possible US-China trade war put pressure on European markets. Remember that the US President threatened to impose a tariff of 10% over 200 000 M.USD on Chinese products, which can later have significant consequences on global production and trade. The producers of raw materials, particularly the mining companies, responded with heavy losses, with the respective sector falling more than 2%. In addition, the oil issue also provided a less comfortable environment for investors. However, the price of oil traded on a downward trajectory, just days before the OPEC meeting.

 

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The European indices began trying to start a technical recovery after two days of selling pressure. Investors will remain vigilant regarding any news, rumor or tweet associated with US trade tensions with its major partners. The attention of investors should be momentarily diverted from issues related to the specter of a trade war and directed towards Sintra. In this Portuguese city, the ECB Annual Forum is taking place and will have its high point today: a roundtable meeting with the Presidents of the ECB, the Fed and the Bank of Japan. Technically, the DAX has an important support zone in the 12550/12600. An initial recovery from this zone can not be ruled out but European markets are vulnerable to a potential shortage.

 

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European markets traded lower, with investors waiting for the OPEC meeting that starts tomorrow. In the international markets, and in face of this event, the price of oil negotiated on a downward trajectory. The banking sector was one of the worst performers of the session.On the positive side was the utility EDF that appreciated, with the speculation that appeared in the market regarding a possible spin-off of the renewable energy and nuclear energy businesses. In the automotive sector, Daimler was penalized for reporting that it reduced its profit estimates for 2018 as a result of current global trade tensions. The Bank of England left the benchmark interest rate unchanged at 0.50%, as predicted by economists, although the number of economists advocating a further increase in interest rates is increasing.

 

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At the macroeconomic level and somewhat surprisingly, the PMI for economic activity (manufacturing and services) improved in June from 54.1 to 54.8.

 

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Trade tensions between the US and China have remained at the center of attention. On Sunday, President Trump sent out a tweet inviting all US trade partners to abandon their protectionist practices under pain of a similar move by the US.

 

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Most European stock exchanges traded slightly lower today, prolonging fears of trade tensions between the US and China. However, raw material producers, one of the most affected sectors recently, have recovered, having led the gains. The automotive sector has presented a contained valuation, after the recent news. Other more specific news also marked the session. British supermarket chain Sainsbury fell by more than 2 percent after industry data showed sales fell in the last three months while other competitors showed higher sales.

 

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European stock exchanges reversed the initial downward trend, because of news about the US. Most of the sectors followed this behavior, with the exception of the banking that was kept pressed. Leading the gains was the energy sector, fueled by news that the United States will have required all countries to fully halt their imports of Iranian oil by November 4 if they want to avoid US sanctions, reinstated after Washington’s withdrawal from the agreement with Tehran. The price of oil rose more than 2% in international markets. In Italy, Saipem rose more than 5%, in Amsterdam Royal Dutch Shell rose 2.48% and in London BP advanced about 3%.
According to Reuters, US officials have said the US government will use an improved security review process to deal with China’s investment threats to acquire US technology instead of imposing specific restrictions.

 

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In the pre-opening, the European indexes rehearsed in descending trajectory, before the return of worries with the global commerce. The US government said yesterday that the Foreign Investment Committee will evaluate US technology or state-of-the-art technology acquisitions by companies with more than 25% Chinese capital. The oil sector will continue to be monitored by investors, after the recent oil price has seen gains in international markets.

 

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Last Friday, european markets traded higher on a day marked by lower than usual liquidity, a trend that marked the week. Some more specific news has boosted their respective sectors, and sentiment is still conditioned by the current trade tensions between the US and its main partners. The Euro appreciated against the Dollar, in view of the agreement reached by the leaders of the European Union on the issue of migration. Producers of raw materials led the gains. Anglo American said it expects results for the first six months of the year to be at least 20% higher than in the same period last year. The mining company rose more than 4%. In terms of economic indicators, Eurostat reported that the inflation rate in the Eurozone increased from 1.90% in May to 2% in June.