July 2009

European Stocks Showing Signs of Slowing Bullish Momentum

Weekly Strategy

FTSE 100

Long-Term Technical Outlook

The FTSE rally from 3461 most likely completed wave 4 within a 5 wave decline from the 2007 high.  Expectations are for wave 5 to drawn the index to a new low (below 3461).

Short-Term Technical Outlook

The FTSE has broken above resistance at 4409.17, the 76.4% Fibonacci retracement level. Near-term resistance lines up at 4505.89, the previous swing top. A Hammer candlestick is showing initial hints of a reversal lower, but confirmation is required on the close of the coming session.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally from the March low counts well as wave 4 within the 5 wave decline from the 2007 high.  Moreover, the decline from 5178 (on short term charts) unfolded as an impulse (5 waves). 

Short-Term Technical Outlook

The DAX 30 has broken above resistance at 50229, the 76.4% Fibonacci retracement level. Prices are now set to challenge the 06/02 high at 51780.

CAC 40

Long-Term Technical Outlook

I’ve made a change to the labeling for the CAC 40. The change brings the count in line with that of the DAX and FTSE counts.  The rally from 2465 was wave 4 of (3).  Wave 5 of (3) is considered underway towards a new low as long as 3400 remains intact.

Short-Term Technical Outlook

The French benchmark index has broken out above a falling channel that had guided prices lower since the swing top in late May. Near-term resistance now stands at 3295.33, the 76.4% Fibonacci retracement level.

IBEX 35

Long-Term Technical Outlook

The IBEX 35 appears to have already completed 5 waves down from its 2007 high.  However, the decline could extend (like the CAC 40 appears to be doing).  The continued divergence with RSI at the recent high also favors weakness going forward.

Short-Term Technical Outlook

Spanish shares are showing signs of ebbing bullish momentum below 1023.73, the upper boundary of a rising channel. Near-term support is seen at the psychologically significant 1000.00 level. A break higher will target support-turned-resistance at 1057.11.

FTSE MIB

Long-Term Technical Outlook

The rally from the March low in the FTSE / MIB index was a 4th wave.  In line with other European indexes, the Milan index is expected to drop to a new low (below 12343).

Short-Term Technical Outlook

Italian shares have found support at the 100-daysimple moving average and rebounded higher, taking out support-turned-resistance in the 18459.31 – 18752.00 congestion region. Prices are now testing resistance at 19912.16, the 76.4% Fibonacci retracement level.

Stocks End Negatively as Banks Disappoint Investors

US Session Key Developments

• Morgan Stanley Losses 152% Worse Than Expected in Q2
  
• Wells Fargo Earnings Blow Past Wall Street Forecasts
  
• Goldman Repays $1.1 Billion To Redeem TARP Warrants
  

Stocks End Negatively as Banks Disappoint Investors

Stocks slid, breaking one of Wall Street’s longest winning streaks after banks including Morgan Stanley and Bank of New York Mellon disappointed investors. Morgan Stanley, which was expected to post a loss of 54 cents per share in the second quarter, actually lost $1.37 per quarter. The conference call in which the company’s CFO, Colm Kelleher, failed to spur any optimistic thoughts invested in the company. In fact, he may have sent an unintentionally negative signal to the market, stating that the company would not be repurchasing shares as had been originally rumored. He also stated that the bank’s capital ratios are “in rude health” and that the “war” for talented employees could not be sustained. The company also “underperformed” in fixed-income trading, the CFO added. Ultimately, the stock plummeted by about 2.8% at the open before rebounding to end the day down only 2 cents from that of yesterday’s close. Bank of New York Mellon, which had been seen as one of the healthiest financial institutions at throughout the crisis reported negative news as the CFO stated that growth will continue to be limited in this current low-rate environment. The stock was sent down 6.15% during the day’s regular session. The even day was helped by news that Goldman Sachs had redeemed it’s $1.1 billion in TARP warrants that had been owned by the U.S. Treasury. Treasury officials reported that they had earned a 23% annualized return on the deal.

Dow 30              8881.26             -34.68                        -0.39%

A mixed day on Wall Street ultimately saw the index finish lower as Consumer Goods plummeted 1.12% after Procter and Gamble finished lower on speculation that the company had plans to sell its prescription-drug business. Coca-Cola also brought the sector down after Pepsi, which is not listed on the Dow, reported stronger-than-expected earnings.

SPX 500              954.07                 -0.51                        -0.05%

The VIX (fear gauge) declined today for the fourth of five days, by 1.6% as many sectors traded in relatively strong territory. Starbucks boosted the Consumer Services sector, which was the best performing one in the S&P 500, after the stock surged ahead 18.38% on explosive earnings, which were posted yesterday after the closing bell.

NAS 100             1926.38                +10.18                          +0.53%

NASDAQ shares actually finished ahead after Apple jumped 3.4% on better-than-expected earnings news published yesterday after the market closed. Yahoo also boosted internet stocks with their earnings, which were 2.2 cents better than estimates.

Daily Commodities Fundamentals:Crude Slips But Metals Stand Strong

North American Commodity Update, Last Updated 7/22/2009 3:55 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Retrace Slightly, Avoid Serious Decline

Crude Oil (WTI)   $65.280                         -$0.330                             -0.50%
Crude Oil future prices saw a decline back towards the psychological $65-per-barrel level today after the Department of Energy reported worse-than-expected Crude inventory figures (see below). US Crude Inventories fell by 1.8 million barrels compared to the 2.1 million expected drop, signaling that demand, which was already weak, may be even less than expected. Just yesterday, OPEC announced that they would consider a cut in supply for the month of September; such an action will become increasingly more likely if demand continues to contract. Crude prices managed to ward off major declines today, however, as US equities and Canadian Retail Sales figures both generated optimism in the global market. Though Wells Fargo reported disappointing earnings today, both Apple and Starbucks exceeded expectations. Major US indices ended near even, while European markets closed slightly higher. The Canadian Retail Sales report, historically a commodity market-mover, came in higher than expected (0.5% expected vs. 1.2% actual). Crude prices, which are free of any technical resistance until  $66.68, have room to improve in the short-term if encouraging fundamental data emerges.

Upcoming Department of Energy Inventories

Commodities – Metals

Precious Metals Manage Gains

Gold                   $950.900                           +$4.000                           +0.42%
Gold future prices broke through the psychological $950-per-ounce level during intraday trading only to retrace and close near even for the second day in a row. As Fed Chairman Bernanke faced the Senate today, his comments were interpreted to be surprisingly dovish, maintaining that a global economic recovery would be slow but will come, citing “notable improvements.” Bernanke did mention that rising unemployment would continue to thwart any short-term economic recovery. The US dollar lost to its major competitors today, though no significant breakouts existed. Recall that Gold and the greenback tend to trade inversely as investors use the metal to hedge against dollar weakness/inflation. Gold future prices should continue to oscillate around the $950 level, following the dollar across periods of varying risk appetite.

Silver                 $13.670                    +$0.192                          +1.42%
Yesterday’s piece ended with the prediction that Canadian Retail Sales, if better than expected, would lead to an increase in Silver future prices. Canada reported a 1.2% growth in retail sales, more than doubling the expected 0.5% gain. The Retail Sales figure is a leading indicator for consumer confidence and consumption, two essential components to a global economic turnaround. The prospect of a near-term economic recovery drove Silver futures higher, as did the weaker dollar. Silver futures, benefitting from both improved industrial reports and dollar weakness, gained more noticeably than Gold. On tap for tomorrow: the UK’s Retail Sales report, which could prove to be as market moving as Canada’s.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

European Stocks Move Slightly Higher as Rally Begins to Lose Momentum

Europe Session Key Developments

•    Crude Moves Lower on Inventory Report
•    Indicator Releases Mixed

European markets reacted positively to more earnings releases and indicators despite a decline in crude oil and commodity firms that tempered the advance to the smallest move in several days. Oil declined as the API reported an increase in crude inventories, while financial stocks also saw profit taking amid modest earnings in the US from Wells Fargo, Morgan Stanley and others. While the sector is certainly at a healthier state than at the start of the year, companies continue to see a rise in bad debt and losses suffered as rising unemployment and weak economies creates a negative feedback loop on banks. Profits seen in the quarter also appear misleading once again as income in trading and underwriting surged amid the impressive rally since March while many firms saw opportunity to raise capital and others, such as banks, were forced to do so. Other gains, such as mortgage originations and refinancing profits, may also be in jeopardy as rates climb and government efforts in quantitative easing to stymie rising rates are due to end in the months ahead. While indicators proved uplifting for European markets today, including a rise in French consumer spending, tomorrow will be watched with anticipation for further improvement in UK housing loans and retail sales. Also on the calendar, US jobless claims and home sales may have a modest effect on optimism.

FTSE 100                      4,493.73                   +12.56               +0.28%
Trading in the British market led to a higher close while weakness was felt in Financials, Basic Materials, and Industrials. Despite the pressure, the three sectors suffered declines of less than 0.50% while Technology and Utilities managed gains of more than one percent each. Stock trading lower included miners Lonmin and Kazakhmys, down 3.15% and 2.12% respectively, along with financial firms including insurer Aviva, lower by 2.24% and Barclays, dropping 3.14% move today. The sectors have seen impressive gains in the past two weeks as the market correction reversed higher and profit taking in the short-term is not unexpected.

CAC 40                     3,305.07                   +2.18                 +0.07%
French stocks closed higher with the smallest gain of the five majors as 55% of stocks fell along with seven of the ten sectors. Health Care gained noticeably at 1.57% as swine flu concerns have investors optimistic on profits in the sector. Also moving sharply was media firm Lagardere, which rose 4.47% as consumer spending increased 1.4% in June. On the other end, Schneider Electric fell the most at nearly two percent, along with greater than one percent declines in insurer Axa and software maker Cap Gemini

DAX                         5,121.56                    +27.59             +0.54%
German stocks rose the most of the five majors as Technology climbed 2.17% along with greater than one percent gains in four sectors while financials fell 0.73%. Automakers, which saw considerable upside on Tuesday, fell today with truckmaker Man lower by nearly two percent while Daimler fell 1.09% and BMW posted a slight loss. Banks also saw pressure as earnings in the US from major firms today showed losses continued to rise despite profits improving in mortgage markets and trading.

IBEX 35                     10,153.40                   +31.20                 +0.31%
Equities in Spain closed higher despite weakness in more than a third of all stocks and declines in four of the nine sectors. Financials in the nation bucked the trend of other European countries and lead advances with a small move of nearly 0.7%. Gains proved limited today as traders took profits from recent gains. TV station operator Gestevision Telecinco rose the most at 2.31% while healthcare firm Grifols fell the most at 1.83%.

S&P/MIB                        19,925.71                    +95.42                  +0.48%
Stocks in Italy rose nearly half of one percent, as the index moves closer to 20,000. Several firms saw considerable action including a 3.7% gain in luxury product maker Bulgari, following a positive comment from BNP Paribas. Action in the index was not all positive as automaker Fiat reported earnings that sent its shares down 1.7%. The company reported a loss of 168 million euros in the second quarter, versus estimates of a 158.4 million euro loss. Revenue also came in weaker at €13.2B versus calls for €13.96B.

Written by Roman Kadinsky, CFDTrading Research
Please send any comments about this report to Rkadinsky@fxcm.com

Dow Looking To Test 9,000 After Breaking Resistance

The Dow has broken above resistance at the June 11th high of 8,877 leaving the psychological barrier of 9,000. If we see a hold there then the blue chip index could see sideways price action over the short-term before the next trend.

The S&P 500 broke through 943 the early January high leaving the June 11th high as the next barrier. If resistance holds there then we could see the broader index become range bound between 870 and 960. However, we could be seeing the beginning of a longer-term bullish trend as the golden cross formation is signaling which a break above could confirm.

The Nasdaq has broken above psychological resistance at 1,900 the 50.0% Fibo extension of 2,549-1,265 at 1,908. A clean break above leaves large upside potential with 2,000 as the next resistance level. However, the level could still hold and a retrace may see the tech laden index settle back into range bound price action.

Hang Seng Continues To Pare Gains From Previous Week, Morgan Stanley Recommends Selling Into Rally

Asia Session Key Developments

• Australian Consumer Prices Expand in Second Quarter
• BoJ Deputy Governor Hirohide Yamaguchi Comments on Exit Strategy

Hang Seng Continues To Pare Gains From Previous Week, Morgan Stanley Recommends Selling Into Rally

Stocks in the Asia/Pacific were mixed, with the Hang Seng shedding 1.30% after Morgan Stanley recommended selling the recent rally in the equities market. The Nikkei and the ASX 200 were both slightly higher on Wednesday however, gains we tapered as market participants continued to soak-in profits following the rise in global equities. Meanwhile, the MSCI Asia Pacific Index strung together its longest streak of gains since January but, the downturn in commodity prices could weigh on the markets over the remainder of the week.

NKY 225                                           9,723.16

Stocks were slightly higher in Tokyo, with the Nikkei 225 adding 71.14 points (0.74%) to close at 9,723.16, led by a 184% rise in basic materials. Shin-Etsu Chemical, the largest producer of semiconductors in the world, rose 4.87% after the firm announced that they may lift wafer prices. Meanwhile, shares of TDK remains on the rise, adding another 3.19% as industrials continue to show robust performance. Meanwhile, BoJ Deputy Governor Hirohide Yamaguchi said the central bank will develop an exit strategy that will ‘not bring about unnecessary market disturbances,’ and went onto say that policymakers ‘will, without any predetermined view, carefully assess developments in corporate financing and financial markets’ to determine ‘whether the supported offered by the current measures is still necessary.’

HSI                                                         19,248.17

The Hang Seng shed another 253.56 points (1.30%), paring the rally from the previous week, to end the session at 19,248.17. The decline was led by a 2.22% drop in telecommunications, with shares of China Mobile tumbling 2.27%, while consumer services slipped 1.98%, led by a 4.03% drop in Esprit Holdings. Moreover, HSBC shed 2.2% as the U.K. Financial Services Authority fined the firm for $4.9M for failing to adequately safeguard confidential information, with Industrial & Commercial Bank of China tanking 2.61% after Morgan Stanley advised investors to sell into the global equity rally. At the same time, China Petroleum and Chemical Corp. jumped 3.76% after Nomura reported that the firm’s 1H income may have tripled.

ASX 200                                            4,068.50

The ASX 200 tipped higher on Wednesday, adding 17.80 points (0.44%) to end the trade at 4,068.50 in Sydney. Singapore Telecommunications rose 2.51%, while shares of Fortescue Metals gained 2.14 %on the back of higher commodity prices. Financials had a poor showing today as Westpac Banking fell 2.41% after announcing a debt issuance, with QBE Insurance shedding 2.17% on the day. Meanwhile, a government report showed consumer prices rose 0.5% in the second quarter, which was in-line with expectations, while the annual rate of inflation slipped to 1.5% from 2.5% in the first quarter.

Notable Asian Session Event Risk / Economic Releases

European Stock Markets Eager On Transparency Of US Fed

Europe: What to Watch For

• Wall Street Rises on Bernanke Testimony, Asia Follows
• Euro-Zone Industrial New Orders Still Falling
• German IFO Hints Improvement, Long Way To Go

European Stock Markets Eager On Transparency of US Fed

European stock exchanges look to parallel similar trends seen in US and Asian markets.  US benchmark indexes rose on Federal Reserve Chairman Ben Bernanke’s testimony to Congress regarding the bank’s exit strategy out of loose monetary policy.  Bernanke noted that recent economic indicators showed some signs of improvement and that he would leave interest rates at current levels for some time.  Euro-Zone Industrial New Orders is expected to fall -27.9% in the year through May indicating that weak global demand continues to weigh on European industries.

DAX 30   5093.97

The German IFO – Expectations Survey is set to measure at 90.1 in June, up from May’s 89.5, marking the seventh consecutive month increase.  Though the metric indicates improving sentiment among German firms, the surveyed figure still falls well short of the 100 centerline between positive and negative outlooks.

FTSE 100   4481.17

Bank of England’s Monetary Policy Committee Minutes are set to be released and may help markets gain more perspective on the BOE’s economic outlook and future policy agenda.

GlaxoSmithKline Plc, the UK’s largest drug maker is scheduled to release second quarter earnings.

CAC 40   3302.89

French Consumer Spending is expected to fall -0.3% in the year end June, bettering its previous reading of  -1.6%.  The report shows that French consumption is declining, albeit at a slower rate, while helping markets evaluate future sentiment of the retail industry and the economy as a whole.  Indication of increased spending may help uplift economic expectations as household expenditures make up 58% of total GDP.

Unibail-Rodamco SA, Europe’s biggest real estate company reports second quarter earnings after the market close.  After the financial crisis impelled the real estate industry to all time lows, improving earnings of the company my help renew confidence in the housing market.

IBEX 35   10122.20

Iberdrola Renovables SA, the world’s largest operator of wind energy farms said that first half earnings dropped -24% as larger expenses cut into gross margins.

FTSE / MIB   19830.29

Fiat SpA, Italy’s largest auto maker is scheduled to release second quarter earnings.  With no events on the economic calendar, the Italian index is likely to parallel trends seen in comparable European markets.

Upcoming European Session Event Risk / Economic Releases

Written by Kevin Yip, CFDTrading Analyst

For questions and comments email kyip@fxcm.com

S&P 500 Hits Highest Level Since November on CIT Optimism

US Session Key Developments

• Bernanke Assures Lawmakers That He Can Choke Inflation
  
• Initial Jobless Claims Fall to Lowest Since Start of Year
  
• Philadelphia Federal Reserve Index of Manufacturing Plummets
  

S&P 500 Hits Highest Level Since November on CIT Optimism

US stocks were mixed for most of the day as Chairman of the Federal Reserve Ben Bernanke spoke on Capitol Hill today, testifying on what has been labeled as his “exit plan” to tighten the loose liquidity practices embarked upon by the Fed. In his statements, the 55-year-old assured lawmakers that he has the tools, along with the necessary will, to choke inflationary pressures as soon as any signs of rising prices begin to show. Furthermore, sentiment was bouyed after speculation that CIT might avoid bankruptcy continued to propagate through the wires. Such conclusions were reached after the nation’s largest financier of vendors said it had reached a deal with its bondholders that would save it $2 billion.

Dow 30              8915.94             +67.79                        +0.77%

Caterpillar rallied 7.67% today after a gauge of economic activity, published by the Conference Board, rose for the third straight month, sending Industrials up 1.33%. Health Care, however, surged ahead 2.52% after Merc’s reported earnings beat that of Wall Street estimates.

SPX 500              954.58                 +3.45                        +0.36%

The VIX (fear gauge) declined today for the third of four days as stocks stayed within a tight range to ultimately finish the day in the green.

NAS 100             1685.20                +6.91                          +0.36%

Telecommunications performed the strongest, jumping ahead by 2.31% as mobile service providers saw a wave of positive earnings data grip the sector. Financials, however, lost over 1.14% as banks sold off more aggressively than usual.

Daily Commodities Fundamentals: Crude Gains, Metals Near Even on Quiet Day of Trading

North American Commodity Update, Last Updated 7/21/2009 4:20 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Push Higher After Encouraging Economic Releases

Crude Oil (WTI)   $64.720                         +$0.740                             +1.16%
Crude Oil future prices impressed again today, again adding another 1% during a relatively non-volatile day of commodity trading. Crude continues to waver around the psychological $65-per-barrel level, struggling to surpass it in the absence of a significant, market-mover. Crude futures benefitted early from the better-than-expected earnings report from Caterpillar, a company whose success by nature is indicative of future economic growth. The Bank of Canada also contributed to Crude’s increase, keeping the benchmark interest rate at 0.25% but improving growth forecasts for the next 18 months. Investors hope that future economic growth will stir Crude demand. However, on the supply side, OPEC is considering a cut in supply for the month of September; an intentional reduction in Crude supply can be used to artificially prop up the prices if they fall to an “unsatisfactory level” by OPEC’s standards. Tomorrow, the Department of Energy will release its weekly stockpile figures; Crude inventories are expected to drop by over two million barrels (see below). Demand for Crude has already been disappointing this summer, so a worse-than-expected release could reverse recent Crude gains.

Upcoming Department of Energy Inventories

Commodities – Metals

Gold Stays Put, Silver Retraces Marginally

Gold                   $948.100                           -$0.700                           -0.07%
As predicted yesterday, Gold future prices are struggling to break and stay above the psychological $950-per-ounce level. Today’s trading yielded little change in Gold as conflicting fundamental data kept net price change near zero. As has been the case for weeks now, the metal traded inversely to the US dollar, which closed higher against all its major competitors today (excluding the Japanese Yen) amid fear that US lender CIT will be seized by the FDIC as early as this August. Gold and the greenback often trade inversely as investors use the metal to hedge against dollar weakness/inflation. During today’s session, US Fed Chairman Bernanke gave his semi-annual address regarding the state of the economy; Gold future prices responded to Bernanke’s assessment that inflation was under control and that economic growth would be slow (but steady). As corporate earnings continue to emerge, Gold futures will continue to depend on investor risk appetite/aversion.

Silver                 $13.540                    -$0.085                          -0.62%
Silver finished slightly lower during today’s trading, given back nearly 0.5%. The stronger US dollar, a result of increased risk aversion, applied some downward pressure on Silver future prices. However, today’s price change may prove to be minimal compared to tomorrow’s potential move;  Wednesday should prove to be an eventful day for Silver future prices as numerous global fundamental data reports are expected to be released. First, the Australian Consumer Price Index may trigger inflationary fear, which could lead to an increase in precious metal prices. Due to Silver’s natural industrial uses, the German IFO Expectations could move the market by signaling near-term economic growth. Last, Canadian Retail Sales and UK Retail Sales are due Wednesday and Thursday, respectively; increased retail sales would indicate increased consumer spending, an essential component of a global economic turnaround.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

European Stocks Continue to Rise as Earnings Fuels Optimism on Second Half Growth

Europe Session Key Developments

•    Commodities Continue to Move Higher
•    Earnings Results Propel Further Upside

Momentum in European markets remained strong with indices closing around one percent higher as earnings reports in the US, including construction equipment maker Caterpillar, along with European firms, helped prolong optimism. At the same time, the rally appears to be slowing down as the Spanish IBEX closed lower and financial weakness marked an otherwise positive day. Commodities started strong with oil rising above $65.50 per barrel before pulling back while metals showed volatility as copper started off the session higher before falling into negative territory around the close of European markets. Stocks are now trading at the same range as May and June, before the correction of more than ten percent that ended in early July. Looking ahead this week, large firms reporting earnings will continue to take center stage as financials from Wells Fargo to Morgan Stanley report on Wednesday in the US, along with other global firms including McDonalds, Microsoft, and UPS later in the week. Also upcoming, indicator releases may play a role as German IFO data is expected to show improvement in July while traders anxiously await British GDP data. The UK traditionally is the first of the major global economies to report quarterly results and should they come in at the small contraction investors currently expect, it could bode well for growth prospects in the second half of the year and an end to the global recession. While earnings reports may already be priced into equity markets, along with cautiously optimistic guidance given, Friday will likely set a precedent for the weeks and months that follow.

FTSE 100                      4,481.17                   +37.55               +0.85%
The British index closed higher as nearly three stocks rose for every stock that fell and gains were seen in all but two sectors, Financials and Utilities. Basic Materials and Technology posted more than two percent advances as optimism of recovery sent commodities higher early on, while also fueling speculation for pent up demand in technology equipment. Financials, which had led the second quarter results in the US and helped boost equity markets, showed weakness today with HSBC down 1.61% while Barclays fell 1.18%. The sector remains a concern as lending may not return to previous year levels anytime soon while much of the gains seen in US results proved to be trading profits, underwriting fees from fixed income/equity sales, and one-time gains from the sale of units or stakes while losses continue to climb in credit cards and housing.

CAC 40                     3,302.89                   +31.95                 +0.98%
Stocks in France gained nearly one percent with seven of ten sectors advancing while losses proved minimal as no sector fell more than 0.36% and no individual stocks saw a loss of two percent or more. Gains, meanwhile, were significant as Renault rose 5.45% on news the firm will set up battery production in the UK. Others seeing considerable moves included hotel operator Accor, which continued its move higher by 4.39% today.

DAX                         5,093.97                    +63.82             +1.27%
Stocks in Germany closed higher by more than one percent as the index continues to climb well above 5,000 points. Consumer Goods and Industrials led the charge with respective gains of 3.31% and 2.34%. Downside meanwhile proved minimal with just 5 of the 30 stocks closing lower and losses in sectors limited to less than two-tenths of a percent. Automakers led the advance today as Volkswagen climbed 5.50% on news the firm plans to stick to its investment in expanding production in Mexico. The firm’s stock has recently seen a decline as talks with Porsche on a merger stalled. BMW also rallied 4.48% as automakers in Europe climbed.

IBEX 35                     10,122.20                   -20.60                 -0.20%
Stocks in Spain fell slightly as a nearly one percent dip in Financials, and weakness in two other sectors outweighed a three percent move in Consumer Services. The four sectors which closed lower make up more than 80% of the index weight. Also, more than 40% of stocks closed with a loss although none fell two percent or more. The contrast today does not come as a shock to investors as the IBEX35 has rallied sharply in recent weeks and remains more than ten percent higher on the year-to-date, ahead of the other four major European indices.

S&P/MIB                        19,830.29                    +313.57                  +1.61%
Italian equities led the five majors with a gain of more than one percent as the index braces closer to crossing 20,000. Considerable movers included insurance firm Assicurazioni, up 3.7% as Bank of America raised its price estimate on the stock. Airport restaurant operator Autogrill climbed 5.5% as data showed an improvement in airline passenger numbers from the previous month. Also, Fiat rose 3.1% ahead of its earnings report tomorrow as automakers climbed in Europe. Italy’s largest bank, Unicredit, added further to optimism as BNP Paribas upgraded its rating on the bank to “neutral” from “underperform” as the firm may see improvement from cost cutting efforts. Second-largest bank, Intesa Sanpaolo, meanwhile, saw its stock rise 2.7% as the ‘outperform’ rating it held saw no change.

Written by Roman Kadinsky, CFDTrading Research
Please send any comments about this report to Rkadinsky@fxcm.com

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