Dax 30; Ftse 100; SP 500 - Market View

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Stock Markets – Closing Note - 22 Oct
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

European markets ended the day in low. The rise of the Chinese stock exchanges and the first reaction of the bond market to the reduction of the rating of Italy gave an initial boost to the stock indices. The 4.50% rise in the Shanghai stock market enabled commodity producers and the auto industry to rank among the best performers. Fiat advanced 3% as a result of the news that it sold its hi-tech unit Magneti Marelli to a company owned by the private equity fund KKR for 6200 M. €. On Friday after closing, Moody's downgraded Italian debt from Baa2 to Baa3 with a stable outlook. This is the last degree of the investment category and indicates a moderate credit risk. In an early stage, the market reacted positively, with Italian yields and its spread declining against the Germans. However, in the second part of the session, Italian bonds lost all ground gained in the morning, spreading their weakness to other European assets. Despite the conciliatory tone of the letter sent by Finance Minister Giovanni Tria to the European Commission, the Italian Government reiterated that it will not change the State Budget already presented. The Earnings Season remains one of the main themes of the week. Ryanair posted a considerable gain, despite having reported a profit for the second fiscal quarter below expectations. The company also announced that it has made significant progress in preventing further strikes. On the contrary, Philips fell more than 6% after its quarterly results fell short of forecasts. Shares of the Day suffered heavy losses (-25%) on the day the company revealed that it reviewed the accounts for 2017 and accounted for minus 20 M. € in revenues.

American indices traded without a common trend. The Dow Jones and S & P were being penalized by the correction of the banking and oil sectors. Nasdaq was trading higher, benefiting from the appreciation of the shares of major technology companies. This week, Microsoft, Google, Amazon, among other companies will report their quarterly accounts.

 

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Stock Markets – Closing Note - 23 Oct
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

Today there were strong losses for European stock exchanges, with investors sentiment influenced by the weakness of the Chinese stock markets and the situation in Italy. Influencing investor sentiment has been the disappointing business results that have marked the last few days. The letter sent to Brussels by the Italian Ministry of Finance was released. In a conciliatory way in which it recognizes some correctness of the objections of the European Commission, the Italian Government has reiterated that it will not alter its Budget. As a result, the market was still waiting for further developments, with the Italian stock market ending up with a 0.70% drop and Italian 10-year yields up 8 basis points (0.08%) compared to yesterday. On the other hand, the poor performance shown by the Asian stock markets also penalized the markets, mainly the producers of raw materials, a sector very sensitive to the economic cycle of this country. Another sector that closed today with heavy losses was the technological one, due to a sharp fall of an Austrian chip maker, AMS. This company disappointed investors by presenting their outlook for the fourth quarter. In Frankfurt, Bayer fell 9.69% following confirmation in the US of the conviction of its subsidiary Monsanto for hiding the danger of Roundup, its herbicide with glyphosate. In the automotive sector, BMW has said it will call for overhauling 1.6 million diesel-powered vehicles worldwide due to problems in the exhaust gas cooling circuit. Renault reported its quarterly sales. Revenues amounted to 11500 M. € compared to the 12,200 M. € that analysts, on average, estimated. Renault cut its projections for the growth of the Chinese car market (2% compared to the previous 5%).

Geopolitical tensions around Saudi Arabia and some disappointing results were hampering the Wall Street session. Before the opening of the session, the results of McDonald's, 3M's and Caterpillar's were known. 3M reported lower-than-expected earnings and revenues while Caterpillar disappointed investors by reiterating its projections for the rest of the year.

 

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Closing Note - 23 Oct
Today there were strong losses for FTSE and European stock exchanges in general, with investors sentiment influenced by the weakness of the Chinese stock markets and the situation in Italy. Influencing investor sentiment has been the disappointing business results that have marked the last few days. The letter sent to Brussels by the Italian Ministry of Finance was released. In a conciliatory way in which it recognizes some correctness of the objections of the European Commission, the Italian Government has reiterated that it will not alter its Budget. As a result, the market was still waiting for further developments, with the Italian stock market ending up with a 0.70% drop and Italian 10-year yields up 8 basis points (0.08%) compared to yesterday. On the other hand, the poor performance shown by the Asian stock markets also penalized the markets, mainly the producers of raw materials, a sector very sensitive to the economic cycle of this country. Another sector that closed today with heavy losses was the technological one, due to a sharp fall of an Austrian chip maker, AMS. This company disappointed investors by presenting their outlook for the fourth quarter. In Frankfurt, Bayer fell 9.69% following confirmation in the US of the conviction of its subsidiary Monsanto for hiding the danger of Roundup, its herbicide with glyphosate. In the automotive sector, BMW has said it will call for overhauling 1.6 million diesel-powered vehicles worldwide due to problems in the exhaust gas cooling circuit. Renault reported its quarterly sales. Revenues amounted to 11500 M. € compared to the 12,200 M. € that analysts, on average, estimated. Renault cut its projections for the growth of the Chinese car market (2% compared to the previous 5%).

 

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Stock Markets – Closing Note - 24 Oct
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

European markets closed with losses in a session that initially had been influenced by the recoveries of the US stock exchanges the day before and the Chinese stock exchanges during the Asian session. Even so, volatility once again dominated the day, as some of the risks that characterize the current economic situation continued to be present. Thus, in the last hour of trading, the European indices lost all the gains made in the morning. The economic and financial situation in Italy has been marked, following the European Commission's disapproval of the Italian Budget for 2019, by an exchange of words between Rome and Brussels. This tension created a selling pressure on Italian assets and the Euro. Investors are now awaiting Standard & Poor's rating of the Italian debt rating, scheduled for Friday. The trend of the session was still influenced by the results reported by European companies before the opening. Barclays posted a better-than-expected result: quarterly profit before taxes increased from 1110 M.GBP in the same period in 2017 to 1460 M.GBP, compared to the expected 1330 M.GBP. Deutsche Bank said third-quarter profit fell 65% to 229 M. €, due to a decline in trading income, although it surpassed the estimates (229 M.€ vs. 149 M.€). Total revenues fell 9% to 6,200 M.€, practically in line with estimates. The bank reiterated its objectives for the coming quarter. STMicroelectronics reported an increase in sales and profit in the third quarter. Net revenues increased 11.20% over the previous quarter to 2520 M.USD, slightly above the company's target and operating profit increased 38% to 398 M.USD. The company said it expects fourth-quarter revenue to grow about 5.70% over the previous quarter.

The three main indices traded bearish. The Nasdaq and smaller S&P were being penalized for weakness in technology stocks. Today and tomorrow, companies like Microsoft, Google and Amazon will report their quarterly accounts. Dow Jones' losses were being mitigated in relative terms by the good performance of Boeing, a company considered a barometer of trade tensions between the US and China.

 

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Stock Markets – Closing Note - 25 Oct
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

The opening of the European session was pressured by the heavy losses suffered by the American indexes yesterday. Subsequently, European markets were able to build a gradual recovery. Somewhat hesitantly, investors began to buy the stocks that had posted the biggest losses in the last week. This was also due to the absence of developments in the tense relations between Italy and the European Commission, which induced Italian 10-year yields to fall from 0.10% from 3.60% to 3.50%. This downward movement of these interest rates favored Italian banking stocks, which served as a catalyst for the rest of the European sector. The Earnings Season was relegated to the background. UBS announced that in the 3rd quarter it achieved a profit of 1200 M. CHF and an operating result of 7300 M.CHF. These two items exceeded analysts' forecasts. Daimler reported an EPS of 1.58€ less than the estimated 1.89€. Revenues amounted to 40210 M€ compared to 39330M€. The CEO of the company defended that in the fourth quarter is expected to see a recovery of activity. The ECB meeting was in line with the expectations of investors, and this institution reiterated the statement from the previous meeting. With regard to the political-budgetary situation in Italy, Mario Draghi was confident that an agreement between Brussels and Rome would be reached.

After the 4% drop yesterday, the US indices traded with a valuation that oscillated between the 1% of the Dow Jones and the 2.50% of Nasdaq. In addition to this recovery represents a technical reaction to yesterday's decline, the US indexes were reflecting the good results of Microsoft. The company reported EPS of USD 1.14 and revenues of USD 29080. These numbers compare with the 0.96 USD and 27880 M.USD forecast respectively. Microsoft was up 5.80%.

 

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Stock Markets – Closing Note - 26 Oct
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

The results released by the North American Amazon and Alphabet penalized the sentiment of investors and, consequently, the European indexes that finished this last session of the week with strong losses. Several sectors reported losses of more than 2%. In fact, the day was marked by the reaction of investors to various business results known on both sides of the Atlantic. In the automotive sector, Valeo recorded a strong devaluation (-21.02%), after the automobile manufacturer downgraded its estimates, based on the slowdown of the Chinese economy. Total fell 1.52%. The French oil company reported a 48% increase in quarterly net profit, due to the increase in oil prices, to 3960 M.USD (slightly above forecasts). Revenues increased 27% to 54720 M.USD. Caixabank rose 0.43%. The bank announced that in the 3rd quarter it reached a net profit of 470 M. €. Net interest income stood at 1240 M. € and the CET1 (fully loaded) capital ratio was 11.40%. In Milan, ENI also appreciated (0.99%) after reporting that quarterly profit increased, due to higher oil prices and lower tax burden. Adjusted net income stood at € 1,390m, compared to € 1020m forecast. Meanwhile, investors are waiting for Standard & Poor's to announce the Italian debt rating. Currently, this agency attributes to Italy a rating of BBB, which corresponds to an adequate capacity to repay the debt contracted but in the future may deteriorate. This rating is two levels above the speculative or junk level.

The US market has returned to negative territory today, with the disappointing results of major technology companies masking published economic indicators. Alphabet and Amazon fell about 3% and 8%, respectively, after yesterday after the closing the two companies made known their quarterly results. The other companies in the FAANG group were also penalized. In terms of economic indicators, the Commerce Department reported that the US economy grew 3.50% over the previous year, up from the 3.30% expected by economists. In addition, private consumption (which contributes more than two-thirds to economic activity) increased by 4%, the May increase since the fourth quarter of 2014), above the expected 3.30%. GDP-related inflation stood at 1.70%, compared with 2.10% expected by economists. On the other hand, the consumer confidence index measured by the University of Michigan reached 98.6 in October, against the expected 99.0.

 

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Stock Markets – Closing Note - 29 Oct
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

After a week of heavy losses, the first day of the week was positive for European stock markets. The decision by the Standard & Poor's agency to reduce only the outlook (perspective) of Italy's debt rather than its rating attenuates the risks associated with Italian fiscal policy in the short term. Italian banks today recorded considerable appreciations (over 3.60%). The automobile sector was responsible for part of the gains, having registered a valuation around the 2.90%. Companies like Volkswagen and Daimler rose more than 5 percent, boosted by Bloomberg news that China will reduce the tax burden associated with buying cars by 50 percent. Banks also lived a positive day, benefiting from some results. HSBC appreciated 5.80%, after having reported a profit before tax of 5922 M.USD (28% compared to the same quarter of 2017) and a banking product of 13798 M.USD (6.32%). These results, which surpassed the forecasts, were due in part to an aggressive but efficient cost cut.

The US market started its session on the rise, fueled by the news about IBM and the performance of the banking industry. IBM declined 3.16% after the company announced that it launched a takeover bid for Red Hat for 34,000 M.USD ($ 190 per share compared to Friday's price of $ 116.68). Red Hat is one of the world's leading experts in enterprise software, particularly in the hybrid cloud concept (based on a person's or company's own cloud interaction with a publicly accessible cloud). However, gains were however hampered by the negative behavior of some technology companies such as Amazon and Netflix. On the macroeconomic front, in September, household income increased by 0.20%, compared to the estimated 0.40%, while spending rose 0.40% in line with expectations. Inflation associated with consumption stood at 2%, also according to economists' projections.

 

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Stock Markets – Closing Note - 30 Oct
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

European markets reversed to negative terrain in the afternoon, with virtually all sectors in negative territory. Leading losses were the producers of raw materials as well as businesses related to travel and leisure. Lufthansa reported quarterly results lower than forecasts, leading to significant losses (-7.76%). BNP Paribas shares fell 2.80% after the bank's quarterly accounts showed that trading income remains under pressure. On the contrary, the BP oil company appreciated around 2% after reporting quarterly profit more than doubled in the three months ending September. Volkswagen also gained ground, after reporting a quarterly profit of 2700 M.€ (145% on the homologous quarter of 2017) compared to the estimated 2290 M.€. In addition to the business results, attention was also focused on US-China trade relations, after it was reported that the Trump Administration was considering increasing the tariffs of 257,000 M.USD of Chinese products that had not yet undergone a worsening of the customs fee if the next meeting between the American President and the Chinese President (scheduled for November G20) is inconclusive. Regarding the macroeconomic scenario, inflation in Germany was published in October, which has risen more than expected, putting inflation at the highest level of the last decade, at 2.50%. At the same time, it was announced that in the third quarter the Eurozone grew 1.70%, the slowest pace since the end of 2014.

General Electric's results have disappointed the market, with the stock retracted to the lowest since July 2009. The company has announced a dividend reduction of $ 0.01 per share and said it will split the power unit into two new units. IBM also lost ground after UBS lowered its target price from $ 180 to $ 150. Meanwhile, Apple shares rose 0.28 percent on the day the Cupertino company introduced a new version of the Mac Mini, which it calls "the longest ever upgrade" of the device. In terms of economic indicators, and on the real estate market, house prices increased by 5.49% year-on-year, the lowest annual growth in the last 20 months. Estimates pointed to 5.80%. Consumer confidence in October, as measured by the Conference Board, reached 137.9, the high of the last 18 years, compared to the expected 135.9.

 

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Stock Markets – Closing Note - 31 Oct
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

European stock markets ended higher in a session in which several sectors of activity closed with valuations above 2%. Of note are the gains of raw material producers, oil companies and the technology sector. As for the reaction of investors to the published results, Sanofi rose 4.67%, after the French pharmaceutical announced higher than expected profits and improved guidance. Also in Paris, L'Oreal appreciated 6.87%, after having released quarterly sales higher than those presented last year. In Madrid, Repsol reported results in line with the estimate and Fitch improved the company's outlook from Stable to Positive, while Telefonica posted higher-than-expected earnings improved its outlook for results for 2018. Both companies recorded considerable appreciations. On the macroeconomic front, inflation in the Eurozone accelerated to 2.20% in October from 2.10% in the previous month and expected by economists.

Wall Street traded higher, recovering part of the losses recorded during the month of October. General Motors and Yum! Brands were favored by their superior results. Coca-Cola also reported quarterly results above expectations, but its shares were now slightly losing. In the technology sector, Facebook was up more than 3.50%, after yesterday after closing reported its results and have informed that its margins should stop decreasing after 2019. Today's session was also boosted by employment data. The ADP Employment Report revealed that 227,000 jobs were created in the private sector, up from 187,000 expected. Also revealed was the Chicago PMI economic activity index which stood at 58.4, below the estimated 60.0.

 

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Stock Markets – Closing Note - 1 Nov
Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:

The main European indexes were divided between gains and losses, pressured by the sharp fall in oil prices in the international markets. Despite this, they managed to close mostly and slightly higher, continuing a certain recovery after having experienced the worst month since January 2016 in October.

Interest rates in euro countries are rising, with the exception of Italy, in a scenario marked by uncertainty surrounding Brexit. The 10-year Italian debt rate is easing 5.2 basis points to 3.376%, moving away from the 3.6% peak reached when the European Commission cut Italy's budget.

On Wall Street, one could assist to an upward inflection. This after the US president assured this Thursday on Twitter that negotiations with China are "on track".