DAX

Stocks Slip On One-Year Anniversary of 12-Year Low For European Equities

Europe Session Key Developments

•    German Chancellor Merkel Urges Derivatives Regulation

•    Greece Continues Efforts to Cut Deficit, May Have Overstated Tax Revenues

•    Commodity Prices Drop on Greenback Strength, European Currencies Weak

European stocks were generally lower today, the one-year anniversary of the “bottom” for European stocks- March 9, 2009 when equities traded to a 12-year low.  The Dow Jones Stoxx 600, a broad collection of European equities, fell for a second consecutive session to 256.80.  Greece continued to stay in the spotlight, as investors today were concerned that Greek tax increases may not generate as much revenue for the government as initially thought.  This would clearly hinder the efforts of Prime Minister George Papandreou in his efforts to reduce the Greek budget deficit to less than the current 12 percent of GDP.  Investors sold off Greek bonds on the news, driving yields 2 basis points higher on 10-year bonds to 6.24 percent.  As for bailout speculation, it appears that EU leaders will try to avoid any provision of aid to Greece as long as the stability of the euro region does not come into question.  The EU’s Olli Rehn maintained in an interview today that Greece remains on the path to debt below 3 percent of GDP by 2012.  German Chancellor Angela Merkel and Luxembourg Prime Minister Jean-Claude Juncker have redirected their efforts towards the derivatives market, calling for the immediate regulation of the “very speculative elements” of such trades in order to maintain regional stability.

Overall, investor uncertainty remained the leading factor for market moves today and drove investors away from riskier assets.  Crude oil traded down nearly 1 percent to the $81 a barrel level, while gold and silver futures dropped to $1118 and $17.21 respectively.  As for currencies, the U.S. dollar strengthened against its European counterparts, gaining against the euro for the first time since Thursday and pushing cable lower for a second day.

FTSE 100                       5602.30                      -4.42                       -0.08%

British shares fell for the first time since Thursday as financial shares dropped over 0.7 percent on the session.  Ratings-agency Fitch said today that the U.K. government must reduce its budget deficit at a faster rate than currently planned because the nation’s credit profile has deteriorated “pretty sharply.”  Standard Chartered fell 2.8 percent on the credit concerns and Royal Bank of Scotland fell 1.2 percent.  U.K. banks may need to shrink their balance sheets by over 500 billion pounds to meet liquidity and capital requirements, according to an analyst at Credit Suisse.  Furthering index losses today were shares of Liberty International, which fell the most this year after the British mall owner reported net asset values that missed estimates.

CAC 40                            3910.01                     +6.47                      +0.17%

French stocks rallied for the second time in three days, led by strength in utilities and health care shares.  Pernod-Ricard posted the largest gain on the index, adding over 1.5 percent, while GDF Suez also posted a strong gain.  GDF, a natural gas and energy services firm, rose on rumors that U.K. utility International Power would consider a “tie-up” with the French utility.  Pharmaceutical firm Sanofi-Aventis added 0.7 percent after an announcement that the firm would combine its veterinary medine units with those at Merck & Co. to create the world’s largest animal health entity.

DAX                                 5885.89                       +9.98                    +0.17%

Trading in Germany led to the biggest gains among major European indices, as the DAX added nearly a quarter-percent on strength in utilities and basic materials shares.  Basic materials traded higher despite weakness in commodity prices, as shares of Bayer rose over 1 percent.  Furthering gains in the sector were Linde, which added 0.6 percent, as well as Salzgitter and Basf, which were also higher on the day.  Mail carrier Deutsche Post had the biggest gain on the DAX, rallying over 2 percent after the company announced its full-year profits for 2009 as “considerably higher” than in the year prior.

IBEX 35                          11002.80                     -75.50                   -0.68%

Trading in Spain led to the biggest loss among major European indices, as Ebro Puleva plunged nearly 5 percent.  The Spanish food company announced yesterday that it would be selling its dairy business to Lactalis, Europe’s largest dairy group.  Other weak performers were Mapfre, which fell nearly 3 percent after announcing its purchase of a 50 percent stake in the insurance units of Caixa Catalunya.  As for financials, Banco Popular fell for the first time in six sessions, dropping over 1 percent after UBS trimmed its price estimate on the shares.

FTSE MIB                      22355.80                     -42.41                    -0.19%

Italy’s FTSE MIB closed lower for the first time in eight sessions on weakness among financial shares.  In addition to a price revision for Banco Popular, analysts at UBS also revised their price estimates lower for Banca Monte dei Paschi di Siena, Intesa Sanpaolo, UniCredit, and Unione di Banch Italiane.  Further dragging down the Italian index today was cable maker Prysmian, which fell over 1 percent on bearish commentary from UniCredit.

DAX

European Equities Generally Higher On Greece Speculation, Portugal Cuts

Europe Session Key Developments

•   Speculation of Greece Bailout Continues Following Sarkozy Comments
•   Crude Oil Trades Higher For Second Day, Precious Metals Fall
•   Euro Gains Against Greenback, Cable Lower

European stocks traded around last week’s close most of the session before closing the day slightly lower.  The Stoxx Europe 600 Index was down 0.1 percent to break a streak of six straight higher closes that included the biggest weekly jump since July.  Last week’s rally was due in part to increased speculation of an end to the Greek fiscal crisis and the possibility of a European Union bailout.  This weekend, French President Nicolas Sarkozy offered the strongest comments to date regarding the possibility of a bailout; “I want to be very clear: if it were necessary, the states of the euro zone would fulfill their commitments,” he said.  Meanwhile, in Washington today Greek Prime Minister George Papandreou called for trans-Atlantic cooperation against “unprincipled speculators” whom he blames for much of the surge in Greek financing costs.  Portugal, which faces its own budget problems, announced plans to sell 6 billion euros of assets to cut debt.  Those assets may include stakes in utility EDP-Energias de Portugal SA and oil company Galp Energia SGPS SA.  The government also said it would limit civil servants’ wage increases to below the inflation rate through 2013 as well as delaying part of a high-speed rail project and increasing taxes on those who earn more than 150,000 euros a year.  Portugal hopes that those measures will help it avoid Greece’s financial woes, particularly ahead of a planned sale of 750 million euros of 11-year bonds later this week.

FTSE 100        5,606.72        +6.96        +0.12%
Just under half of the components of the British benchmark index were up today, extending last week’s 4.6 percent gain.  Declines among health care stocks were overcome by healthy gains from the utility and energy sectors.  All four health care components were down as the group declined 0.6 percent.  AstraZeneca led the sector lower after its experimental Recentin drug failed to match Roche Holding AG’s Avastin in tests for use as a first-line treatment against colon cancer.  AstraZeneca’s stock fell 1.42 percent to 2,953 pence and erased 2.42 index points.

CAC 40          3,903.54        -6.88            -0.18%
Trading on the CAC led to the worst performance among benchmark indices for the top five European economies.  The French Business Confidence took a hit, unexpectedly dropping from 104 to 102 in February as the government phases out economic stimulus measures.  Among French equities, industrial stocks were the worst performers, dropping 0.5 percent as a group.  EAD, the maker of Airbus jets, was right in line with the group’s decline, slipping 0.5 percent after six straight days of gains.  The company said it would report a loss for 2009.

DAX            5,875.91        -1.45            -0.02%
German stocks, weighed by the basic materials sector, were marginally lower as a group.  German industrial production rose in January by 0.6 percent after falling 1 percent in December.  Economists had forecast a 1 percent gain in January.  On the equities front, basic materials shares were down 0.4 percent as the CRB Commodity Index was slightly lower.  German steelmaker Salzgitter dropped 1.4 percent after the company was cut to “neutral” from “overweight” at JPMorgan Cazenove.

IBEX 35            11,078.30        +58.50            +0.53%
Stocks on Spain’s benchmark index gained for a seventh consecutive day, pushing the IBEX to its highest close since February 2.  Basic materials and energy stocks were the strongest performers today on generally higher commodity prices.  Acerinox was the strongest among basic materials shares, gaining 2.3 percent after Kepler Capital Markets raised its recommendation on the shares on Friday.  Spanish-Argentine oil group Repsol led energy shares, gaining 1.2 percent.

FTSE MIB            22,398.21        +120.09            +0.54%
Trading on Italy’s FTSE MIB  led to the largest gain among major European indices.  Banca Generali rose for a sixth consecutive session, gaining over 4 percent after announcing that net income was significantly better than last year.  Saipem, Europe’s largest oilfield-services provider, gained nearly 2 percent on rising crude prices.

Written by Gary Chalik, CFDTrading Research
Please send any comments about this report to GChalik@fxcm.com

DAX

European Equities Climb For Sixth Day on Greece Speculation, U.S. Payrolls

Europe Session Key Developments

•   European Union Working to Develop Rescue Plan For Greece
•   German Factory Orders Increase, U.S. Nonfarm Payrolls Better Than Expected
•   Commodities Trade Higher On Dollar Weakness and Better Economic Outlook

European stocks rallied for a sixth consecutive day on speculation for an EU rescue of Greece and better-than-expected jobs data from the U.S.  The Dow Jones Stoxx 600, a broad collection of European equities, closed the trading week at its highest level since January.  Investors continued to applaud actions taken by Greece to reign in the euro-area’s largest budget deficit.  Prime Minister George Papandreou has taken the task of slashing government spending and raising taxes, amid public outcry and protests from his home citizens.  Today, speculation abound that EU nations are working on a rescue plan to aid the Prime Minister in his efforts.  Luxembourg’s Jean-Claude Juncker, who heads the euro-area finance ministers, said that “we’re not abandoning Greece” and praised the country’s efforts thus far.  EU lawmakers plan to hold hearings on the Greece situation in the coming weeks, and investors seem confident that the necessary steps will be taken to maintain stability in the euro zone.  Furthering bullish sentiment was the nonfarm payrolls report out of the U.S., which showed that payrolls fell by 36,000 in February, less than the 68,000 anticipated.  The news helped to rally both equities and commodities, which were led by a near 2 percent gain in the price of crude oil to nearly $82 a barrel.  Precious metals also traded higher, as gold futures rose to $1139 per troy ounce on the COMEX and silver futures rallied above the $17.40 level.  Despite the better-than-expected payrolls data, investors sold off the U.S. dollar due to its “safe-haven” status.  The euro rallied against the greenback to $1.36 at the time of this writing, and cable rose above $1.51.

FTSE 100                    5599.70                      +72.54                       +1.31%
British shares rebounded from yesterday’s losses as basic materials and financials posted strong gains on the day.  Basic materials shares were led by a 5 percent gain for Xstrata and a 4 percent gain for Fresnillo as commodity prices rallied across the board.  Xstrata, a mining firm, agreed to sell the Prodeco coal operations in Colombia to Swiss commodities firm Glencore.  Financial shares rallied over 2 percent today led by fund manager Schroders.  The firm followed up its strong gains from yesterday’s sessions after reporting that assets under management increased 35 percent last year.

CAC 40                            3908.12                     +79.71                      +2.08%
French stocks rallied over 2 percent today as all ten of the CAC components closed higher on the session.  Nearly every stock in the index closed higher as Societe Generale gained nearly 5 percent to push financial shares up over 3 percent on the day.  Technology shares also performed well as Alcatel-Lucent rose 3.5 percent as it expands its relationship with Kenya Data Networks.  Water company Veolia Environnement was the lone laggard on the index, falling 4 percent after reporting full-year net income that missed analysts’ estimates.

DAX                                 5878.57                       +83.25                    +1.44%
German stocks posted gains today as factory orders increased for the month of January.  Consumer goods and basic materials added at least 1.8 percent each to push the overall index to its highest close since January.  Automobiles were the best performing sub-sector of consumer goods, as Daimler gained over 3 percent after announcing its February global sales were 8.9 percent higher than a year earlier.  The report showed that global demand is improving and helped push shares of competitors BMW and Volkswagen up 2.5 percent and 3.2 percent, respectively.

IBEX 35                          11010.20                     +264.90                   +2.47%
Trading in Spain led to the biggest gain among major European indices, as stocks on the IBEX had their best day since July.  ArcelorMittal and Acinerox each gained at least 2.8 percent as commodity prices continued their surge higher.  The financial sector gained over 3 percent on the day, as Banco Santander and BBVA rallied over 3.4 percent each.  Banco Santander raised $2.2 billion today from a sale of bonds backed by U.K. residential mortgages.  The banks were also pushed higher by speculation that they may be in the bidding for Turkish lender Garanti Bank.

FTSE MIB                      22278.12                     +433.56                    +1.98%
Italy’s FTSE MIB advanced for a sixth consecutive session, closing the trading day up over 4 percent on the week.  Among the most actively traded stocks in Milan were Italcementi, Italy’s largest cement maker which gained nearly 2 percent, as well as Banca Italease, whose shares rose 4 percent.  It was the largest increase since 2009 for Banca Italease, after a price was set for an offer by Banco Popolare.  Shares of UniCredit and Intesa Sanpaolo advanced over 1.5 percent each, after analysts at BofA Merrill Lynch initiated a “buy” recommendation to both firms.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

DAX

European Stocks Rise for Fifth Day, Central Banks Keep Rates Steady

Europe Session Key Developments

European stocks were mostly higher for the fifth straight trading day.  The Stoxx Europe 600 Index gained 0.2 percent as national benchmark indices increased in 9 of 18 western European markets today.  Stocks trended higher through most European event risk before paring their advance after a report showed pending U.S. home sales unexpectedly fell in January.  Economists had forecast a 1 percent gain, while the index of purchase agreements for existing homes sank 7.6 percent.  Stocks were relatively unaffected by the BoE and ECB interest rate decisions announced at 12:00 GMT and 12:45 GMT respectively.  Both central banks left benchmark interest rates unchanged at 0.50 percent and 1.00 percent respectively.  The BoE also decided to keep its bond-purchase program unchanged for the second month while the ECB tightened the terms of its regular three-month market operations and returned to offering such funds at a variable rate.  The greenback appreciated against sterling and the euro after the respective central banks announced their rate decisions.  Positive U.S. economic data also facilitated the dollar’s advance.  A report from the Labor Department showed claims for U.S. jobless benefits dropped from a three-month high last week.  Overall, the dollar gained 0.7 percent against its major trading partners.  The CRB Commodity Index dropped 1 percent on the dollar’s advance.  Natural gas was a major laggard as contracts for May delivery dropped 3.6 percent to 4.65 USD/MMBtu.  Tomorrow the infamous U.S. change in non-farm payrolls should provide direction for all markets going into the weekend.  Economists are currently predicting that payrolls fell 63,000 in February and that the unemployment rate will rise to 9.8 percent according to Bloomberg surveys.

FTSE 100                         5527.16                      -6.05                       -0.11%
Commodity shares dragged British stocks lower as the CRB Commodity Index dropped 1 percent.  Basic Material stocks were the worst performers as the group dropped 1.1 percent in the session.  Shares of Rio Tinto and BHP Billiton both fell 1 percent.  Technology stocks were on the other end of the spectrum; the group gained 1.1 percent in the session.  The best performing issue of the session was Schroders which climbed 6 percent as the money manager reported record inflows for 2009.

CAC 40                            3828.41                     -14.11                      -0.37%
Seven out of ten components declined to drag the CAC 40 down for the first time in five days.  The index was paced by Vinci, the world’s biggest builder, which saw its shares climb 2.6 percent to 41.22 euros.  The company reported 2009 income of 1.6 billion euros that beat analysts’ estimates.  However, the positive earnings were overshadowed by GDF Suez, which contributed the most to today’s decline as its shares fell 2.7 percent.  The operator of Europe’s largest natural gas network said that profit was little changed in 2009 on lower fuel prices and a slump in industrial demand.

DAX                                 5795.32                       -22.56                    -0.39%
The DAX was the worst performer among the benchmark equity indices of the five largest European economies despite more than half the components advancing.  Basic Material stocks were the major laggards as the group fell 1.1 percent in today’s session.  Individually, Siemens AG and BASF SE led declines in the German benchmark index.  Shares in the two companies declined 1.1 and 1.2 percent respectively.  Deutsche Bank, Germany’s biggest bank, was among the best performers, rising 1.4 percent, despite its credit rating being cut by Moody’s based on the company’s dependence on the securities unit.

IBEX 35                          10745.30                     +80.80                   +0.76%
Three components advanced for every one that declined as the IBEX was one of the better performing indices in western Europe.  Health care stocks performed the best as a group, gaining 1.6 percent.  Financial stocks also fared very well with Banco Santander and BBVA contributing the most to the advance of the IBEX.  Shares in the two companies advanced 1.1 and 1.4 percent respectively.  In addition, Banco Popular posted the biggest gain on the IBEX.  The stock rose 4.0 percent.

FTSE MIB                     21844.56                     +99.50                    +0.46%
Italy’s FTSE MIB advanced for the fifth straight day paced by shares of Prysmian and Safilo Group.  Shares of Safilo, the world’s second-largest maker of eyewear, climbed 13 percent after Bank of America Merrill Lynch initiated coverage of the company with a “buy” rating.  Shares in Prysmian, the world’s second-biggest cable maker, rose 1.5 percent after the company said 2009 net income rose 4.6 percent from 2008.  Additionally, Goldman Sachs announced it would be selling a 16.8 percent stake in Prysmian.

Written by Gary Chalik, CFDTrading Research
Please send any comments about this report to GChalik@fxcm.com

DAX

European Equities Continue Winning Streak on Greece Deficit Cuts, Higher Commodity Prices

Europe Session Key Developments

•    Greece Announces More Deficit Cuts, No Aid Yet From Other EU Members
•    Euro-Zone Services Data Disappoints, German Retail Sales Hold Steady
•    Crude Oil Trades Higher, Gold Hits $1140 For First Time Since January
•    Euro, Pound Post Strongest Gains Against Greenback in Two Weeks

European stocks gained today for a fourth consecutive session as Greek leaders announced 4.8 billion euros of new deficit cuts and commodity prices extended their weekly gains.  The day’s events continued to boost sentiment and pushed the Dow Jones Stoxx 600, a broad measure of European equities, to its highest level in six weeks.  The initial report out of Greece came from Prime Minister George Papandreou, who announced that his Cabinet backed an aggressive plan to cut the country’s deficit that will include higher tobacco and alcohol taxes, as well as reduced public worker payments.  The announcement helped investors regain confidence in the country’s debt, driving the yields on Greek 10-year debt down 17 basis points to 5.97 percent.  Other European leaders, however, remain uncommitted to providing assistance to the troubled nation.  German Chancellor Angela Merkel said that her meeting in two days with Papandreou will not be about aid commitments.  The news helped further the euro rally against the U.S. dollar, as the regional currency gained 0.6 percent against the greenback to $1.37, its highest level in two weeks.  The news also sparked a rally in the British Pound, which snapped a six-game skid and returned to the $1.50 level against its American counterpart.

As for commodity prices, oil rallied for a second day to close above $80 a barrel despite a higher-than-expected inventory announcement from the U.S. Department of Energy.  Gold led another advance in precious metals, as the yellow metal closed above $1140 per troy ounce for the first time since January 19.  On today’s economic docket, January German retail sales were unchanged despite expectations for a 0.6 percent drop, while Euro-Zone services data disappointed for February.  Euro-Zone retail sales fell 0.3 percent in January, as expected; the second decline in retail sales in the past three months.  All eyes now move towards interest rate decisions and accompanying commentary tomorrow from the European Central Bank and the Bank of England.  The central banks are expected to keep their benchmark interest rates at 1.00 percent and 0.50 percent, respectively.

FTSE 100                         5533.21                     +49.15                     +0.90%
British stocks posted strong gains today after U.K. PMI services data rose from 54.5 to 58.4 in February, soundly beating expectations for an increase to 55.0.  Six of the ten FTSE components closed higher on the day, led by a 2.8 percent gain for basic materials and a 1.5 percent increase in telecommunications shares.  Basic Materials shares were led by a 5.6 percent rise in Lonmin shares, while Kazakhmys shares gained nearly 5 percent as copper prices continued to rise.  Telecom shares were led higher by a 2 percent gain for BT group and a 1.5 percent gain for Vodaphone.

CAC 40                             3842.52                     +30.60                    +0.80%
French equities traded higher despite a worse-than-expected PMI services report for the month of February.  All ten components of the CAC posted gains on the day and nine stocks rose for each that fell on the index.  Dexia posted the strongest gain today, rising nearly 5 percent after pricing $4 billion of fixed-rate and floating-rate debt guaranteed by Belgium and France.  Other strong moves came from Bouygues and LaFarge, which rose over 4 percent each.  The gain for Bouygues, a French telecom firm, came after the company announced  a 5 percent increase in gross revenues for the 2009 fiscal year.

DAX                                  5817.88                    +41.32                     +0.72%
Trading on the DAX led to a slight gain as retail sales held steady in January and PMI services increased in the following month.  Industrials and basic materials were the strongest sectors, adding over a percent each, while financial stocks rose just under 1 percent.  Industrials were led by 2 percent gains for Deutsche Post and Thyssenkrupp.  Deutsche Post was the strongest stock of the index today, gaining 2.3 percent after Commerzbank analysts upgraded their rating from “hold” to “buy.”  Among basic materials shares, Salzgitter and Bayer had the strongest gains, adding 2 percent each on rising commodity prices.

IBEX 35                           10664.50                   +143.00                    +1.36%
Trading in Spain led to strong gains as eight of the ten IBEX components closed higher today.  Basic materials and financials posted the strongest gains, while consumer goods and technology shares were the index laggards.  Gamesa continued its volatile trading, posting a 6 percent gain to lead the index.  The Spanish wind turbine maker has been exploring the possibility of building a wind turbine plant in Denmark.

FTSE MIB                        21745.06                    +313.65                  +1.46%
Italy’s FTSE MIB was the strongest performer among the major European indices after its PMI services data beat expectations in February..  The most active stocks traded in Milan today included Compagnie Industriali Riunite and Fondiaria-Sai, whose shares gained at least 3.5 percent each.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

DAX

European Stocks Rise on Announcement of New Greek Budget Cuts

Europe Session Key Developments

•    Greece Will Announce as Much as 4.8 Billion Euros of Cuts to Europe’s Biggest Deficit Tomorrow
•    Sterling Continues to Slide Ahead of BoE Interest Rate Decision on Thursday
•    Commodities are Generally Higher Amid Dollar Weakness and Economic Optimism

European stocks rose for a third day as Greek spokesman Giorgos Petalotis said the government will announce additional measures to reduce Europe’s biggest deficit tomorrow.  Greece will announce as much as 4.8 billion euros ($6.5 billion) of cuts, bowing to pressure from the European Union and investors.  The new measures will include higher tobacco, alcohol and sales taxes and deeper cuts in public workers’ bonus payments according to an unnamed source.  The yield on the benchmark 2-year Greek bond tumbled 19 basis points today to 5.52 percent as speculation grew that the EU will bail out Greece after the new budget cuts.  Speculation that an end to Greece’s debt crisis might be near also pushed the Stoxx Europe 600 Index 0.8 percent higher to 250.65, its highest close in a month.

On the currency front, the single currency gained today while cable continued its slide.  Midday, the euro was 0.3 percent stronger against the dollar to 1.3605 while sterling had depreciated 0.3 percent to 1.4956.  In general, the dollar index was 0.2 percent weaker.  Commodities have also gained as a group; the CRB Commodity index was 0.9 percent higher.  Precious metals and Energy provided major strength; the two groups rose 2.0 percent and 1.5 percent respectively.  Ahead for tomorrow, the Nationwide Building Society will report British Consumer Confidence and the Deutsche Bundesbank will report German Retail Sales.  The two events will provide some risk but not quite as much as both the BoE and ECB interest rate decisions on Thursday.  Though interest rate swaps are pricing in no probability of either of these banks raising rates by even 25 basis points, traders will be looking closely at the language for any signs of an increase in the scope of quantitative easing programs, particularly in the case of the BoE.

FTSE 100                         5484.06                     +78.12                     +1.45%
The FTSE 100 Index was the best performer among benchmark equity indices of Europe’s five biggest economies.  Insurance stocks were the only sector in the red while gains were led by British Airways and ICAP.  British Airways stock was up 6.2 percent as airlines across Europe gained following a lower than expected loss posted by Lufthansa, Europe’s second-biggest airline.  ICAP rose 4.6 percent after coverage of the stock was initiated at UBS with a “buy” rating.

CAC 40                            3811.92                     +42.38                     +1.12%
French stocks advanced for the third straight day, led by gains in PSA Peugeot Citroen and L’Oreal.  Peugeot, Europe’s second-largest carmaker, surged 3.4 percent after it said the year has started “better than expectations.”  The carmaker also put plans to expand in India on hold pending the outcome of talks with Mitsubishi Motors.  The pair have been exploring the possibility of Peugeot taking a stake in Mitsubishi, which is already present in India.  L’Oreal also rose on merger speculation as there has been renewed buzz about a possible bid for the company by Nestle.  L’Oreal stock was up 2.7 percent to 79.67 euros.

DAX                                 5776.56                       +63.05                    +1.10%
German stocks were led higher by automakers and airlines today as only two of the thirty issues on the DAX finished the session in the red.  Lufthansa and Bayerische Motoren Werke were among the highest gainers on the DAX benchmark index.  BMW, the world’s biggest maker of luxury cars, rose 2.9 percent to 31.34 euros after the CEO of the company said the company will focus on reaching a 1.3 million-vehicle sales goal this year.  Lufthansa rose 3.6 percent after the airline reported that it had achieved a positive operating income in 2009.

IBEX 35                          10521.50                     +86.60                   +0.83%
Retail, Media, and Insurance stocks were the only industry groups to decline today as Spanish stocks rose for a third straight day.  Commodity producers led the advance as commodities gained 0.9 percent in today’s session.  Basic Material stocks were up 2.5 percent as a group and Energy stocks were up 1.1 percent.  The biggest individual mover was Iberia Airlines, which gained 5.7 percent to follow other European airlines higher.  Another major mover was Repsol, Spain’s largest oil company, which increased 1.2 percent and contributed 7 index points to today’s advance.  In addition to higher oil prices, the company was raised to “hold” by ING.

FTSE MIB                     21431.41                       +110.61                   +0.52%
Italy’s FTSE MIB was the weakest advancer of benchmark indices of Europe’s five biggest economies.  Fiat SpA climbed 3.9 percent to 8.25 euros as automakers across Europe saw their shares get a lift today.  The Stoxx 600 Automobiles & Parts Index rose as much as 2.5 percent today, the best performance among 19 industry groups in Europe’s Stoxx 600 Index.  Italian car registrations rose 21 percent last month from a year earlier while sales of Fiat’s three main brands rose 17 percent.

Written by Gary Chalik, CFDTrading Research
Please send any comments about this report to GChalik@fxcm.com

DAX

European Stocks Rise For Second Day on Manufacturing, Employment Data

Europe Session Key Developments

•    EU Pressures Greece to Set Forth Plan in the “Coming Days”
•    Euro-Zone Unemployment Surprisingly Falls to 9.9 Percent in January
•    February Manufacturing Data Generally Higher Across Europe
•    Euro Stalls Against Greenback, Cable Falls to Lowest Close Since May

European stocks rallied today on a better-than-expected employment reading for the euro zone and generally improved manufacturing numbers across the region.  The bullish economic data helped push the DJ Stoxx 600 Index, a broad measure of European equities, higher for a second consecutive session.  The first wave of positive news came from London-based Markit Economics, who announced that European manufacturing accelerated at the fastest pace in over two years in February.  The manufacturing PMI data increased from 52.4 to 54.2 in the month, an encouraging sign to investors as manufacturing accounts for nearly a quarter of the region’s economy.  Furthering positive sentiment was the regional employment report that showed Euro zone employment fell from 10.0 percent to 9.9 percent in January, surprising many economists who expected the jobless rate to tick higher to 10.1 percent.  The news bolstered risk appetite and helped offset continued concerns over sovereign debt problems in the euro region.  The massive debt of Greece is the most pressing concern, as the country’s debt-to-GDP stands at over 12 percent- four times higher than the European Union’s set limit.  EU Monetary Affairs Commissioner Olli Rehn said today that Greece must set forth new measures “in the coming days” to alleviate regional concerns and justify any aid that may be provided by stronger regional countries.  Speculation continued to swirl around the situation and expectations for a potential bailout helped boost Greek debt, pushing yields lower by nearly 10 basis points.  The speculation, however, failed to lift the euro currency, which stalled against the U.S. dollar as concerns remain over sovereign debt issues throughout the region.  The British Pound also faired unfavorably against the greenback, as the cable closed below $1.50 for the first time since May 2009.

FTSE 100                         5405.94                     +51.42                     +0.96%
British stocks traded higher today as U.K. manufacturing grew for a fifth month in February.  Each sector on the FTSE traded higher with the exception of financials, which fell on poor end-of-year earnings from HSBC.  Shares of the large British bank fell over 5 percent after the company announced that its full-year profits fell 24 percent to $7.1 billion in 2009.  Outside of financials, however, trading in London led to substantial gains as consumer goods and commodity shares gained well over a percent each.  Mining stocks were strong today as copper climbed to a seven-week high after an earthquake in Chile raised concerns over supply disruptions.  The strongest gains within the sector came from Kazakhmys and Xstrata, which rallied 5.2 percent and 3.6 percent respectively.

CAC 40                             3769.54                     +60.74                    +1.64%
French equities closed higher today on better-than-expected manufacturing data, which propelled thirty-nine of the forty CAC stocks higher on the day.  Bouygues Telecom led the way, gaining over 4 percent after last week signing a 3G network-sharing agreement with other French mobile operators.  Carrefour, the largest retailer in Europe, added 3.6 percent after analysts at RBS upgraded the shares from “sell” to “hold.”  Furthering gains on the index were telecom firm Alcatel-Lucent and European hotel leader Accor, whose shares each rose at least 3.2 percent.  France’s largest drugmaker, Sanofi-Aventis, also gained over 2 percent today after investor Warren Buffett revealed an increased stake in the company.

DAX                                  5713.51                    +115.05                     +2.06%
Trading on the DAX led to the biggest gain among the major European indices as health care stocks rose 3.5 percent and basic materials shares added 2.7 percent.  Health care stocks were led by a 3.7 percent gain for Fresenius Medical, which announced better-than-expected earnings results for the fourth quarter and full-year 2009.  Leading drugmaker Merck & Co. also had a strong showing, gaining nearly 3 percent after revealing that the company has over forty experimental drugs in middle-to-late stage testing.  As for basic materials shares, Bayer led the way with a 3.7 percent gain, despite being cut to neutral by analysts at Credit Suisse.  Chemical firm BASF gained over 2 percent in anticipation of the company’s fourth quarter earnings report.

IBEX 35                          10434.90                    +101.30                     +0.98%
Trading in Spain led to a near 1 percent gain as consumer services, industrials, and telecommunications gained at least 1.3 percent each.  Wind-farm operator Acciona and Spanish builder Sacyr Vallehermoso each gained over 1 percent on an improved outlook from analysts.  Gestevision Telecinco added 1.3 percent after being named a “top pick” by Banesto Bolsa.  The worst performer on the index was Gamesa, which fell 2.6 percent after analysts at UBS cut its price estimate on the shares.

FTSE MIB                     21320.80                     +252.48                    +1.20%
Italy’s FTSE MIB gained over 1 percent despite disappointing manufacturing data for January and an unemployment rate that held at 8.6 percent through January.  The most active stocks traded in Milan today included FastWeb, which added 5.3 percent to end its two-day losing streak, and Pirelli & Co., which also rose 5.3 percent after the tiremaker was upgraded by analysts at Equita Sim.  Telecom Italia also helped to lift the index, adding over 2 percent after Fitch Ratings said that controversy surrounding Telecom’s Sparkle unit would not likely affect the firm’s credit rating.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

DAX

European Stocks Correct Higher, Bias Remains Bearish

WEEKLY STRATEGY

FTSE 100

Long-term Technical Outlook

The FTSE is testing channel support and a break below would strongly suggest that the advance from the 2009 low is complete. The rally is in 5 waves and is therefore probably just the first wave of a larger correction (b wave underway now). Initial support is 4955.

Short-Term Technical Outlook

The FTSE has found near-term support at 5316.79, the 50% Fibonacci retracement of the downswing from the swing high in mid-January. Near-term resistance remains at 5383.72, the 61.8% Fib reinforced by support-turned-resistance at the bottom of a previously broken rising channel. Negative RSI divergence argues for a bearish bias. A break lower exposes the 38.2% mark at 5249.86.

DAX

Long-term Technical Outlook

The DAX is in the same position as the FTSE. The index is testing channel support now and dropping below would suggest that the rally from the 2009 low is complete as an A wave. Initial support is 5159.

Short-Term Technical Outlook

German shares broke down below the lower boundary of a rising channel that had been guiding prices higher since the beginning of the month, with prices now stalling above the 38.2% Fibonacci retracement of that rally at 55702. Continued selling will target 55260, the 61.8% Fib level.

CAC 40

Long-term Technical Outlook

The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.

Short-Term Technical Outlook

The French benchmark index found support at the bottom of a rising channel that has been guiding the move higher since the beginning of the month, a level reinforced by the 38.2% Fibonacci retracement level at 3697.72. A push lower will target the 50% Fib at 3668.73, while near-term resistance is found at the channel’s mid-line (now at 3757.56).

IBEX 35

Long-term Technical Outlook

After reversing in January, the IBEX has declined in impulsive fashion. Additionally, RSI divergence on the weekly suggests that the top is important. Favor the downside. The next support is 993.

Short-Term Technical Outlook

The IBEX corrected slightly higher to meet near-term resistance at 1025.14, the 23.6% Fibonacci retracement of the latest down leg. A break above this boundary exposes the 38.2% Fib at 1035.11, while near-term support is marked by the last swing low at 1009.01.

S&P/MIB

Long-term Technical Outlook

The FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and has fallen beneath channel support. The drop below channel support indicates that the path of least resistance is lower. The next level of support is 20702.

Short-Term Technical Outlook

Italy’s benchmark index has retraced a bit higher after breaking out of a rising channel that had framed the upswing from the lows set earlier this month. Near term resistance stands at 21349.62, the 38.2% Fibonacci retracement of the 02/08-02/22 rally, and reinforced by the channel’s lower boundary. Near-term support lines up at 21180.81, the 50% Fib.

DAX

European Stocks Generally Higher on Industrial Orders, U.S. Fed Comments

Europe Session Key Developments

•    U.S. Fed Chairman Bernanke Says Interest Rates to Remain Low For Foreseeable Future
•    Standard & Poor’s Says It May Downgrade Greece’s Credit Rating
•    Europe Industrial Orders Unexpectedly Climb, Boosted by Machinery Demand
•    Euro Rises Against Greenback, Cable Falls

European stocks were mostly higher today on surprisingly strong industrial orders data for the region and commentary from U.S. Fed Chairman Ben Bernanke that indicated low rates would remain for the foreseeable future.  Equity markets in France, Germany, Italy, and the U.K. rallied for the first time this week, while Spanish stocks fell for a third consecutive session.  Investor sentiment increased during the early hours of trading after Germany announced a rise in its GfK Consumer Confidence Survey, as the index rose from 3.0 to 3.2 in March.  The European Union’s statistics office in Luxembourg announced soon after that the region’s industrial orders unexpectedly rose 0.8 percent in December.  The surprise increase was led by a rise in demand for machinery and capital goods and boosted investor confidence regarding the strength of Europe’s recovery.  As a result, both stock and commodity prices closed slightly higher, as crude oil returned to $80 a barrel and agricultural products gained.  Gold, on the other hand, closed below the $1100 mark for the first time in seven sessions despite Dollar weakness.  The U.S. Dollar Index posted its second loss in three days, closing just above the 80 level for a sixth straight session.

In the final hour of today’s trading, investors cheered comments out of the U.S. from Fed Chairman Ben Bernanke that interest rates would remain low going forward.  The Fed Chairman stated that the country’s “nascent” recovery, as seen by low rates of resource utilization and high unemployment, would require low rates “for an extended period.”  This commentary offset lingering concerns for European investors that their region’s own economic recovery still faces serious hurdles.  Unemployment in the region remains above 10 percent, and sovereign debt issues have gone unaddressed thus far.  EU leaders may be forced into action soon, however, as Standard & Poor’s said today that it will consider downgrading Greece’s credit rating in the near future.

FTSE 100                         5342.92                     +27.83                     +0.52%
British stocks traded higher today for the first time this week on strength in the technology and financial sectors.  Leading financial shares higher was Lloyds Banking, which gained 3.4 percent as investors await the company’s earnings reports tomorrow.  HSBC Holdings followed suit, gaining 2 percent as investors await its earnings next week.  Shares of HSBC, Europe’s largest bank, have rallied for eight consecutive days.  Technology shares were the second-strongest sector today as Sage Group and Autonomy Corp. gained at least 1.4 percent each.

CAC 40                             3715.68                     +8.62                     +0.23%
French equities closed higher today despite higher-than-expected job losses in December, as technology shares gained over 1.8 percent.  STMicroelectronics posted a 2.6 percent gain to lead tech stocks, while Cap Gemini and Alcatel-Lucent gained at over 1 percent each.  Yesterday, STMicroelectronics introduced a new family of highly efficient power rectifiers to help power-suppy companies achieve energy-efficient approvals.

DAX                                  5615.51                    +11.44                     +0.20%
German stocks posted a small gain after a final reading confirmed that the country’s economy stalled in the fourth quarter of 2009.  Fresenius Medical Care posted the largest gain on the DAX, adding over 4 percent on news that the company would double its budget for acquisitions to $400 million this year.  Volkswagen was the next strongest DAX performer today, gaining 1.6 percent after setting aggressive sales goals yesterday for its growing line of products.  Volkswagen also received a ‘Canadian Car of the Year’ award.

IBEX 35                          10254.00                     -58.90                     -0.57%
Trading in Spain led to the only decline among major European indices as financials fell over 1.3 percent.  Spanish banking giants BBVA and Banco Santander both dropped over 1 percent after Barclays Capital reduced its outlook on the financial institutions.  Barclays analysts downgraded BBVA from “overweight” to “underweight” and cut Banco Santander from “equalweight” to underweight”.  Telecinco continued its volatile trading of the last few weeks, dropping over 2.2 percent today.

FTSE MIB                     21346.31                     +122.24                    +0.58%
Italy’s FTSE MIB gained for the first time this week despite disappointing retail sales in December.  Trading in Milan led to a near 3 percent gain for STMicroelectronics after BofA-Merrill Lynch kept the chipmaker as its top pick for the industry.  Banco Popolare gained 2 percent after an upgrade from Banca Akros, while investment bank Mediobanca added 2.8 percent on better-than-expected net income.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com

DAX

European Stocks to Extend Decline as Prices Clear Key Support

WEEKLY STRATEGY

FTSE 100

Long-term Technical Outlook

The FTSE is testing channel support and a break below would strongly suggest that the advance from the 2009 low is complete. The rally is in 5 waves and is therefore probably just the first wave of a larger correction (b wave underway now). Initial support is 4955.

Short-Term Technical Outlook

The FTSE has put in an Evening Star candlestick formation below resistance at 5383.72, the 61.8% Fibonacci retracement of the downswing from the swing high in mid-January reinforced by support-turned-resistance at the bottom of a previously broken rising channel. A break below the 50% Fib at 5316.79 exposes the 38.2% mark at 5249.86.

DAX

Long-term Technical Outlook

The DAX is in the same position as the FTSE. The index is testing channel support now and dropping below would suggest that the rally from the 2009 low is complete as an A wave. Initial support is 5159.

Short-Term Technical Outlook

German shares down below the lower boundary of a rising channel that had been guiding prices higher since the beginning of the month, with prices now working negotiating the 38.2% Fibonacci retracement of that rally at 56144. Continued selling will target 55702, the 50% Fib level.

CAC 40

Long-term Technical Outlook

The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.

Short-Term Technical Outlook

The French benchmark index has dropped toward support at the bottom of a rising channel that has been guiding the move higher since the beginning of the month. This juncture (now at 3682.82) is reinforced by the 23.6% Fibonacci retracement of the 01/11-02/08 decline, with a break lower opening the door for considerable downside to target the 3600.00 figure.

IBEX 35

Long-term Technical Outlook

After reversing in January, the IBEX has declined in impulsive fashion. Additionally, RSI divergence on the weekly suggests that the top is important. Favor the downside. The next support is 993.

Short-Term Technical Outlook

The IBEX has followed up a large Bearish Engulfing candlestick formation with a move below support at a rising trend line set from the swing low set earlier this month. Initial support now stands at 1023.09, the 23.6% Fibonacci retracement of the 02/03-02/05 downswing.

S&P/MIB

Long-term Technical Outlook

The FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and has fallen beneath channel support. The drop below channel support indicates that the path of least resistance is lower. The next level of support is 20702.

Short-Term Technical Outlook

The IBEX has followed up a large Bearish Engulfing candlestick formation with a move below support at a rising trend line set from the swing low set earlier this month. Initial support now stands at 1023.09, the 23.6% Fibonacci retracement of the 02/03-02/05 downswing.

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