DAX

European Stocks Mostly Slump, Though Buoyed by Optimism from ECB Monthly Bulletin Editorial for August

Europe Session Key Developments

• The ECB Publishes August Monthly Report
• Euro-zone Industrial Production Falls Unexpectedly
• Irish Debt Default at Highest Risk in 17-Months

European Stocks Mostly Slump, Though Buoyed by Optimism from ECB Monthly Bulletin Editorial for August

European equity markets moved slightly lower Thursday, though the British exchange managed to move marginally higher. In the wake of pessimistic and dovish commentary by the Federal Reserve, as well as weak economic data from Asia and Europe earlier in the week, investors and governments alike have withdrawn from risky assets. Thus far, the Euro has declined against all other major currencies this week, falling 2.75 percent against the Dollar from Monday through today. Early in the day, the European Central Bank released their ECB Monthly Bulletin Editorial for August, which exhibited signs of cautious optimism for future growth prospects for Europe. However, in direct contradiction to this sentiment, data showed that Euro-zone Industrial Production for June declined by 0.1 percent. According to a Bloomberg survey, Production was expected to have risen by 0.6 percent after expanding by 1.1 percent in May. Year-over-year data showed growth of 8.2 percent against 9.3 percent expected. In the middle of the session, another round of disappointing jobs data from the United States further shook investor sentiment. Initial Jobless Claims for the week ending August 7 rose by 2000 to 484,000, the highest level since mid-February, as the labor market continued to trim jobs as the economy slowed. The number of unemployed citizens receiving benefits dropped, however, while those getting supplemental benefits advanced sharply by 1.34 million as the government extended benefits eligibility. Overall, the FTSE gained 0.40 percent, while the DAX and IBEX dropped the most, falling 0.31 percent each.

Looking ahead to Friday, there are several events which could prove to provide event risk during the European session. First, German Gross Domestic Product data is due, which is anticipated to have expanded by 1.3 percent in the second quarter, on a quarter-over-quarter basis. French employment data will be released, as well as the Consumer Price Index and Gross Domestic Product figures. Finally, in the two more important releases of the day, the Euro-zone Trade Balance for June is forecasted to have risen to €1.0 billion as the Euro remained depreciated in June. Lastly, Euro-zone Gross Domestic Product data for the second quarter is expected to have risen by 0.7 percent, after rising by 0.2 percent in the first quarter of 2010.

FTSE 100                             5266.06                   +20.85               +0.40%

On Thursday, the FTSE 100 was the lone major European equity index to finish higher; it gained 20.85 points, or 0.40 percent, before closing at 5266.06. The British index remains down on the week, after failing to break resistance at 5400 on Monday. The FTSE was pushed higher by its health care sector, which posted a 1.58 percent gain. For the second time this week, shares of GlaxoSmithKline led the way, gaining 2.62 percent before closing at 1196 in London. The index was weighed by its underperforming industrials sector, which lost 0.67 percent during intraday trading. The industrial companies suffered following a worse-than-expected Euro-Zone Industrial Production report as discussed above.

CAC 40                                    3,621.07                  -7.22                 -0.20%

Despite a somewhat choppy trading session, the CAC 40 closed near even today, losing a modest 7.22 points, or 0.20 percent, to finish at 3621.07. The index had traded below the psychologically significant 3600 level before posting an impressive recovery back towards its opening level. The broader index was mixed as a whole; four sectors finished the day higher, while six sectors ended the day in the red. Continuing its decline from yesterday, the financial sector was the worst performing sector in the CAC 40. The financial companies lost an aggregated 1.37 percent, led by insurance provider AXA SA, which lost 3.33 percent to close at 13.21.

DAX 30                                   6135.17                     -18.90                -0.31%

The DAX 30 was the worst performing major European equity index, losing 18.90 points, or 0.31 percent, before closing at 6135.17. However, despite today’s poor showing, the German index has outperformed its counterparts in 2010, boasting a 2.98 percent gain year-to-date. Three of the DAX’s nine sectors finished higher on Thursday, led by its telecommunications sector. Deutsche Telekom, the lone company listed as part of the sector, gained 2.62 percent during intraday trading to close at 10.39. The index was particularly weighed by its consumer goods sector, which fell 1.39 percent. Daimler AG and BMW, the nation’s largest automotive manufacturers, lost 2.79 percent and 1.17 percent, respectively.

IBEX 35                              10342.40                   -32.40                -0.31%

The IBEX 35 struggled again on Thursday, shedding an additional 32.40 points, or 0.31 percent, to finish the day at 10342.40. The Spanish index is now 13.38 percent lower in 2010, making it the worst performing major European equity index this year. During today’s trading session, the IBEX was pushed lower by its large financial sector, but buoyed by its telecommunications sector. The financial companies listed on the IBEX, which comprise over 40 percent of the broader index’s weight, lost a total of 0.64 percent. Banco Santander, having lost 4.39 percent yesterday, fell an additional 0.33 percent to close at 9.69. Shares of Banco Santander now stand at the midpoint of the 52-week range of 7.22-12.14.

FTSE/MIB                        20539.40                   -39.84                 -0.19%

After yesterday’s astounding 680 point sell-off, the FTSE/MIB lost another 39.84 points, or 0.19 percent, to close at 20539.40. Having opened the week around 21300, the Italian index has suffered as of late, trading as low as 20358 on Thursday. The MIB is now down 11.65 percent YTD.

Written by Jay B. Steinberg and Christopher Vecchio, CFD Trading Analysts
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

European Stocks Slump as Dovish Commentary by Federal Reserve, Downward Revision of UK GDP by Bank of England Erode Recovery Sentiment

Europe Session Key Developments

• The Bank of England Revised Downwards its Growth Forecasts
• Chinese Inflation Outpaces Expectations; Growth to Cool
• Fed Reserve’s Dovish Commentary Spooks Investors

European Stocks Slump as Dovish Commentary by Federal Reserve, Downward Revision of UK GDP by Bank of England Erode Recovery Sentiment

European equity markets slumped on Wednesday as a string of weak economic data from Asia and Europe eroded investor sentiment. Early in the session, Chinese policy makers announced that the Consumer Price Index for July rose by 3.3 percent, despite falling retail sales and industrial production. Furthermore, slowing exports reveal the risk that softened overseas demand for Chinese goods will drive a further slowdown in the world’s third-largest economy. Meanwhile, while Britain’s ILO Unemployment Rate held steady at 7.8 percent in June, the Bank of England today downgraded its forecast for U.K. growth and now expects inflation to be above the central bank’s target until at least 2012. In part, the higher inflation forecasts are due to the valued-added tax expected to be imposed starting in January. The Bank of England’s quarterly inflation report notes that “risks to growth remain weighted to the downside,” and as such, the Bank’s austerity plan as well as quantitative easing plan are likely to continue for some time. Much of the fall, though, was fueled by dovish commentary by the Federal Reserve yesterday, as the U.S. Federal Open Market Committee said that the recovery is going to be “more modest” than previously forecasted. Accordingly, all major European equity markets fell more than 2 percent, with the IBEX and S&P/MIB falling more than 3.20 percent each.

Looking forward to Thursday, there are several events on the docket that could prove to be market moving. The European Central Bank publishes his August Monthly Report, while later on Euro-zone Industrial Production for June is expected to show an increase by 0.6 percent. Overall, Industrial Production is forecasted to rise by 9.3 percent from the same period in the previous year. In the U.S., jobs data is due in the middle of the European session. Initial Jobless Claims are anticipated to rise by 465 thousand, for the period of August 7, while Continuing Claims for the period of July 31 are expected to weigh in at 4535 thousand.

FTSE 100                      5245.21                   -131.20               -2.44%

The FTSE 100 fell another 131.20 points, or 2.44 percent, to finish the day at 5245.21. The index has been unable to hold on to any gains above 5400 in recent weeks. As discussed above, dovish comments from the Bank of England shook investor sentiment regarding the health of the domestic recovery, which translated into today’s poor performance. The basic materials sector was the worst performing of all ten sectors; it lost 3.84 percent Wednesday after shedding 2.22 percent yesterday. Shares of Rio Tinto, the world’s third largest mining company, fell 3.88 percent, while BHP Billiton PLC, the world’s largest mining company, watched its share price fall another 3.34 percent. Shares of embattled oil producer BP lost almost 2 percent before closing at 411.00 in London.

CAC 40                        3,628.29                  -102.29                 -2.74%

The CAC 40 continued yesterday’s rapid sell-off, losing another 102.29 points, or 2.74 percent, before closing at 3628.29. The French index has now fallen nearly 4 percent in two days. All of the CAC’s ten sectors finished lower as not a single company managed to post an intraday gain. As was the case on Tuesday, the financial companies were again the French index’s worst performers. The financial sector gave back 4.01 percent on Wednesday, led by the nation’s largest bank, BNP Paribas, whose share price fell 3.93 percent. Shares of Societe Generale lost another 4.19 percent after falling almost 3 percent yesterday.

DAX 30                        6154.07                     -132.18                 -2.10%

As has been the case throughout 2010, the DAX 30 managed to outperform its European counterparts, limiting its losses to 132.18 points, or 2.10 percent. The German index now sits at 6154.07 as it tests trendline support originating in mid-June. The industrial sector was the worst performing of the index’s nine sectors; it lost 2.92 percent during Wednesday’s trading session. The sector’s decline was led by its largest component, Siemens AG. The nation’s largest manufacturer watched its share price fall 2.60 percent intraday; it has now given back nearly all of its gains from earlier in the week after a better-than-expected German Exports figure.

IBEX 35                     10374.80                   -343.70              -3.21%

The IBEX 35 was the worst performing major European equity index on Wednesday; the Spanish index lost 343.70 points, or 3.21 percent, to close at 10374.80. Today’s decline marked the biggest sell-off since June 24th, when the index dropped nearly 367 points. Though all 10 of the index’s sectors finished lower, the IBEX was weighed by its financials sector, which lost 4.33 percent during intraday trading. The performance of the broader IBEX 35 is particularly vulnerable to its financial companies, as they comprise over 40 percent of the entire index’s weight. Banco Santander, the nation’s largest bank, saw its share price decline 4.39 percent to close at 9.72, the midpoint of its 52-week range.

FTSE/MIB                20579.24                -680.65               -3.20%

The FTSE/MIB plummeted an incredible 680.65 points, or 3.20 percent, before closing at 20579.24. Today’s move was the largest intraday decline since June 4th, when the Italian index lost nearly 800 points. The MIB is now down 11.48 percent in 2010, only outdone by the Spanish IBEX 35, which has lost 13.11 percent year-to-date.

Written by Jay B. Steinberg and Christopher Vecchio, CFD Trading Analysts
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

European Stocks Retreat amid Continued Growth Concerns as FOMC Decision Looms

Europe Session Key Developments

• Concern Over Chinese Growth Hurts Stocks
• Uncertainty Regarding FOMC Decision Weighs on Risk Appetite

European Stocks Retreat amid Continued Growth Concerns as FOMC Decision Looms

During yesterday’s trading session, equities had benefitted from the possibility that further stimulus from the Federal Reserve would support economic growth; however, the same logic did not carry through today’s trading session. Investors fled riskier assets in favor of safer ones, such as U.S. treasuries, whose yields continued to venture lower. Today’s auction of $34 billion worth of 3-year notes is expected to offer historically low yields, potentially below 0.81 percent, displaying the degree of concern that remains in the market amid what Fed Chairman Ben Bernanke refers to as “unusual uncertainty.” Global economic releases did little in the way of stimulating demand for risk. China’s trade surplus ballooned to $28.7 billion in July from just $20.02 billion in June, highlighting the contrast between the growth prospects in the world’s two most important economies. Slowing imports in China revealed that the pace of recovery there may be slowing, which induced a sell-off in global equities. Overall, all major European equity indices closed lower on Tuesday; the CAC 40 led the decline after yearly French Industrial and Manufacturing Production figures came in worse-than-expected, at 5.7 and 5.0 percent respectively (vs. 7.3 and 7.0 percent expected).

Looking ahead, the Federal Open Market Committee’s rate decision due at 16:15 GMT will likely guide the remainder of the U.S. equity session and could potentially move European indices tomorrow. The FOMC will almost definitely keep the overnight lending rate at 0.00-0.25 percent, but many believe the Committee may enact some small-scale quantitative easing measure. It remains to be seen how the market will price in the decision; while a commitment to further stimulus would be beneficial to companies worldwide, such an action would also highlight the dire state of the U.S. economy. Tomorrow’s economic release schedule is relatively quiet with the exception of the U.K.’s Claimant Count Rate (4.5 percent expected) and the Bank of England’s Quarterly Inflation Report. For weeks, the BoE has kept its benchmark interest rate steady at 0.50 percent in the face of domestic inflation exceeding its 2 percent target.

FTSE 100                      5376.41                   -34.11               -0.63%

As technical indications had suggested, the FTSE 100 was unable to hold on to its gains above the psychologically significant 5400 (see yesterday’s wrap-up for an illustration). The British index gave back 34.11 points, or 0.63 percent, to close at 5376.41. The basic materials sector was the worst performing of all of the FTSE’s ten sectors; it lost an astounding 2.22 percent during Tuesday’s trading session. Shares of Rio Tinto, the world’s third largest mining company, fell 1.97 percent, while BHP Billiton PLC, the world’s largest mining company, watched its share price fall 2.31 percent. GlaxoSmithKline finished 2.17 percent higher to finish at 1177 in London.

CAC 40                     3,730.58                  -46.79                 -1.24%

The CAC 40 was the worst performing European equity index on Tuesday, suffering from disappointing domestic economic releases discussed above. The French index lost 46.79 points, or 1.24 percent, to finish the day at 3730.58. The CAC has proven unable to successfully break resistance around 3800, a level it has not closed above since before the ‘flash crash’ back in early May. Nine of the index’s ten sectors finished lower; the health care sector was the lone sector that managed to close higher, gaining 0.30 percent as a whole. The financial companies were the worst performers on the day, losing an aggregated 1.83 percent. Shares of Societe Generale lost 2.78 percent, while BNP Paribas saw its share price fall 1.69 percent on Tuesday.

DAX 30                        6286.25                    -65.35           -1.03%

After testing resistance by the 6380 level earlier in the week, the DAX 30 now sits nearly 100 points below that mark. During Tuesday’s trading session, the German index retraced 65.35 points, or 1.03 percent, to close down at 6286.25. Today’s decline came in spite of an in-line with expectations domestic Consumer Price Index; a measure of monthly CPI came in at 0.3 percent. All nine of the DAX’s sectors finished lower on Tuesday; the index was particularly weighed by its consumer goods sector, which lost 1.43 percent. Automobile manufacturers BMW and Daimler AG led the way, losing 2.17 and 1.78 percent respectively. The DAX is still 5.52 percent higher in 2010, making it the only European equity index to remain positive on a year-to-date basis.

IBEX 35                     10718.50                   -94.10                -0.87%

The IBEX 35 finished 94.10 points, or 0.87 percent, lower on Tuesday to close at 10718.50. Nine out of the index’s 10 sectors finished lower on the day, with the healthcare sector acting as the only bright spot, gaining 0.79 percent. However, this sector only comprises 0.41 percent of the broader IBEX’s weight and as a result, had very little impact on the index’s overall performance today. The financials sector, which composes over 40 percent of the Spanish index, lost 0.97 percent intraday. Banco Santander, the nation’s largest bank, lost over 1 percent before closing at 10.16. The industrials companies listed on the IBEX also contributed to its decline; the industrial sector gave back 1.92 percent, making it the worst performing sector of all on Tuesday.

S&P/MIB                        21359.89                   -81.73                  -0.38%

The S&P/MIB retraced nearly one third of yesterdays 257 point increase during today’s trading session. The Italian index closed at 21359.89, down 81.73 points, or 0.38 percent. The MIB is now down 8.55 percent year-to-date, making it the second-worst performing major European equity index (the IBEX 35 is down 10.23 percent).

Written by Jay B. Steinberg, CFD Trading Analyst
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

European Stocks Jump Ahead of FOMC Meeting

Europe Session Key Developments

• German Trade Data Shows Bump in Exports
• Euro-Zone Sentix Investor Confidence Surges

European Stocks Jump Ahead of FOMC Meeting

European equity markets gained on Monday as trade data from Europe’s largest economic state boosted recovery optimism. German Trade Balance figures from June showed a further increase in the surplus, edging up to €14.1 billion from €9.8 billion in May. While Imports increased over the same period, Exports increased by a greater amount, up by 3.8 percent. In what was a particularly quiet day for newsworthy data releases, the Euro-zone Sentix Investor Confidence reading for August surged to 8.5 from -1.3 in July, outpacing a Bloomberg forecast of 1.6. As the results of the CEBS Banks’ Stress Tests have fully begun to sink in, it appears that sentiment has gathered that the health of the European financial sector is strong enough to hold off a ‘double-dip recession,’ despite continued problems that excess sovereign debt might pose to the economic union. Overall, all five major European equity markets were up over 1.2 percent, with the French exchange gaining the most, up 1.65 percent.

Looking forward to Tuesday, there are several events which pose risk to market volatility. Early in the European session, German inflation data will be released, with the Consumer Price Index for July expected to rise 1.1 percent as ECB key interest rates remained on hold. Both French Manufacturing and Industrial Production are expected to increase from June in the previous year, though month-over-month data remains muddled. The British Trade Balance is expected to improve, from -£8062 million in May to -£7800 million in June. Finally, what could prove to be market moving later in the session, U.S. Wholesale inventories figures for June is expected to increase by 0.4 percent; high Wholesale Inventories indicate that unsold goods are piling up, suggesting that retailers are facing lagging consumer demand and unwilling to purchase goods.

FTSE 100                      5410.52                   +78.13               +1.47%

The FTSE 100 finished up 78.13 points, or 1.47 percent, breaking through the 5400 level before closing at 5410.52. The British index now sits just 0.04 percent lower year-to-date. Though the recovery from May’s ‘flash crash’ has been relatively steady thusfar, the FTSE has failed to hold on to any upside momentum beyond 5400. During today’s trading session, all ten of the sectors that comprise the FTSE 100 finished higher; the consumer goods and financials sectors were the top performers, gaining 1.84 and 1.73 percent, respectively. Barclays PLC, one of the nation’s largest banking institutions, saw its share price add 3.20 percent to close at 335.00. Shares of embattled oil giant BP posted a 1.74 percent increase to close at 432.75 in London.

CAC 40                       3,776.33                  +60.28                 +1.62%

The CAC 40 index opened nearly 50 points higher on Monday, and then proceeded to float within a tight range of 3760-3780 before closing near the upper bound at 3777.37. The 60.28 point (1.62 percent) increase was a stark turnaround from the near 50 point selloff on Friday. While all ten of its sectors gained, the French index was pushed higher by its financials and oil & gas sectors, which gained 1.97 percent and 1.91 percent, respectively. Shares of BNP Paribas, the country’s largest bank, closed 2.24 percent higher at 56.96. Total S.A. (FP), an international leader in oil & gas exploration, benefitted from the improvement in investor sentiment. The company’s share price posted a 2.00 percent gain to close at 40.81.

DAX 30                        6351.60                    +91.97           +1.47%

After dropped almost 74 points on Friday, the DAX 30 index more than retraced its decline by posting a 91.97 point, or 1.47 percent, increase today. The German index now sits 6.62 percent higher in 2010, making it the top performing European equity index and the only one to remain positive on a year-to-date basis. The DAX seems poised to re-test the critical 6380 level, which has served as resistance since early April. Though all nine of the index’s sectors finished higher Monday, the industrials sector fare especially well, adding 2.19 percent during intraday trading. Siemens AG, one of Germany’s largest manufacturers, gained 2.76 percent to close at 78.45, just below its 52-week high of 79.65.

IBEX 35                     10812.60                   +161.50                +1.52%

The IBEX 35 gained 161.50 points, or 1.52 percent, during intraday trading to finish at 10812.60. The Spanish index opened nearly 150 points higher, which almost completely retraced the index’s loss on Friday following the disappointing U.S. Non-Farm Payrolls report. On Monday, all ten of the IBEX’s sectors gained; the consumer goods and industrials sectors were the top performers, posting a 1.98 percent and 1.92 percent increase, respectively. Gamesa Corporacion Technologica (GAM SQ), a manufacturer of wind turbines, was the only company listed on the IBEX whose share price declined; it finished at 6.44, down 0.39 percent.

S&P/MIB                  21341.62                   +257.15                  +1.22%

The S&P/MIB posted a remarkable 257.15 point, or 1.22 percent, gain on Monday, finishing the trading session at 21341. Despite falling nearly 100 points at the beginning of the US session, the Italian index managed to re-assert itself and hold on to its gains from earlier in the session.

Written by Jay B. Steinberg and Christopher Vecchio, CFD Trading Analysts
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

European Stocks Tumble as Data Weighs on Recovery Optimism

Europe Session Key Developments

• German, UK Industrial Production Falls Short of Forecasts
• U.S. Labor Market Continues to Shed Jobs, though Unemployment Holds

European Stocks Tumble as Data Weighs on Recovery Optimism

European equity markets fell on Friday, shedding some of their gains from early week jumps as data across the globe disappointed investors. Industrial Production data from both Germany and the UK showed signs of contraction, contrary to slight expansion forecasted, according to a Bloomberg survey. UK Industrial Production withdrew by 0.5 percent in June versus 0.1 percent expansion expected, after rising by rising by 0.7 percent in May. The trend was similar in Germany, where Industrial Production was expected to by 0.5 percent for July but in fact declined by 0.6 percent. Despite these data, both Bank of England and European Central Bank policy makers were upbeat yesterday in their assessment of their economies, believing that while recent numbers suggest improvement across all industries, accommodative monetary policy must continue for some time. However, in what proved to be the most market moving data on Friday, the U.S. labor market continued to show signs of a choppy recovery, with Non-Farm Payrolls declining by 171 thousand jobs. Although both U.S. Private Payrolls and Manufacturing Payrolls expanded in July, buoying the Unemployment rate at 9.5 percent, European equity markets fell across the board upon the data release. Overall, all five major markets declined, with the IBEX dropping the most, down nearly one-and-three-quarters of a percent.

Looking to Monday, only two events from Europe likely will influence equity markets. First, German Trade Balance data for June is due, which, buoyed by a weaker Euro and strong exports, is expected to increase to €12.0 billion. Later in the session, the Euro-zone Sentix Investor Confidence measure for August is forecasted to rise to 2.0 from -1.3 in July.

FTSE 100                      5332.39                   -33.39               -0.62%

The FTSE 100 index declined again during intraday trading, losing another 33.39 points, or 0.62 percent, to finish at 5332.39. The British index now sits down 1.49 percent year-to-date after managing to turn positive last week. Nine of the FTSE’s 10 sectors lost on Friday. The consumer goods sector particularly weighed on the index, losing 1.52 percent during intraday trading. Unilever PLC (ULVR LN), one of the U.K.’s largest manufacturers of branded and packaged consumer goods, lost another 2.71 percent after dropping 5.19 percent yesterday.  The telecommunications sector acted as the lone bright spot, adding 0.94 percent. Vodafone Group managed to gain 1.13 percent to close at 152.25; the company’s share price is now testing its 52-week high of 153.80 that was set back in April.

CAC 40                       3,717.73                   -46.46                 -1.23%

The CAC 40 suffered a 46.46 point, or 1.23 percent, selloff on Friday to finish the week at 3717.73. It now stands down 5.55 percent year-to-date. The French index traded sideways until the shocking U.S. Non-Farm Payrolls report, when it dropped over 60 points in a matter of minutes. The CAC’s utilities sector was the worst performer, losing 2.05 percent. The sector has now given back nearly all of its gains from earlier in the week. Only 2 of the 40 companies listed as part of the CAC 40 finished higher on Friday, the more notable being Societe Generale. The bank’s share price 0.30 points, or 0.65 percent, to close at 45.52.

DAX 30                        6259.63                    -73.95                 -1.17%

On Friday, the DAX 30 dropped 73.95 points, or 1.17 percent, to close at 6259.63. The German index now sits 5.07 percent higher year-to-date, making it the only major European equity index to remain in positive territory in 2010. Prior to dropping 100 points after the NFP report, the DAX tested the significant 6380 level but failed to break though. The health care sector was the only sector that managed to finish higher on Friday; it edged up a modest 0.08 percent. The index was weighed by its consumer goods sector, which lost 1.82 percent. Daimler AG and Volkswagen lost 2.75 percent and 2.15 percent, respectively.

IBEX 35                     10651.10                   -188.90                -1.74%

The IBEX 35 was the worst the biggest loser out of all the major European equity indices on Friday. The Spanish index lost 188.90 points, or 1.74 percent, to end the week at 10651.10. It is now down 10.79 percent year-to-date. Though all of the IBEX’s ten sectors finished lower, the financial companies’ performance was particularly disappointing.  The financial sector, which accounts for over 40 percent of the entire index, gave back 2.25 percent during intraday trading. Shares of Banco Santander, the nation’s largest bank and the index’s largest holding (22.69 percent), lost an astounding 2.60 percent to close at 10.11.

S&P/MIB                21084.47                    -218.50                  -1.03%

The S&P/MIB dropped 218.50 points, or 1.03 percent, to finish at 21084.47. The Italian index had opened the day up nearly 200 points, but after the disappointing economic release out of the United States, it dropped 400 points before closing at its current level. The MIB is now 9.31 percent lower in 2010.

Written by Jay B. Steinberg and Christopher Vecchio, CFD Trading Analysts
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

Major European Indices Finished Mixed Despite Thursday’s Notable Event Risk

Europe Session Key Developments

• Encouraging German Factory Orders Fail to Move Markets
• ECB, BoE Keep Overnight Lending Rates Steady

Major European Indices Finished Mixed Despite Thursday’s Notable Event Risk

European equity markets finished Thursday relatively unchanged despite major event risk throughout the session. Early in the session, German Factory Orders for June outpaced analysts’ forecasts, expanding by 3.2 percent against a predicted 1.4 percent gain. Following the surprising data, German Bund yields dropped across the board. Unsurprisingly, both the Bank of England and European Central Bank held their interest rates at 0.50 percent and 1.00 percent, respectively. The Bank of England also announced that it would retain its Asset Purchase Target at £200 billion. While ECB President Trichet declared that there would be “no chance” of a “double-dip” recession thus rendering the current rate appropriate, he did note that the ECB will do whatever is necessary to halt any further backlash from the sovereign debt crisis. Despite this positive sentiment, investors were unimpressed with the news and equity markets barely moved. The FTSE, IBEX, and S&P/MIB all fell less than 0.8 percent, while both the CAC and DAX crept up by less than 0.1 percent each.

Looking ahead to tomorrow, significant data coming from across Europe and the United States could prove to be market moving. British Industrial Production data for June is expected to show 0.1 percent expansion while the Producer Price Index for July is forecasted to drop by 0.5 percent. Additionally in Europe, German Industrial Production data for June and Italian Gross Domestic Product for the second quarter will be released as well. However, in what will likely be the most important data released on Friday, U.S. Non-farm Payroll data, as well as the Unemployment Rate, for July will be released in the second half of the European trading session. With Payrolls expected to drop, and the Unemployment Rate forecasted to increase to 9.6 percent in the United States, Friday could prove to be a volatile trading day across equity markets and currencies.

FTSE 100                      5365.78                   -20.38               -0.38%

Continuing yesterday’s decline, the FTSE 100 gave back another 20.38 points, or 0.38 percent, to finish at 5365.78 after Thursday’s trading session. The British index now sits down 0.87 percent year-to-date after managing to turn positive last week.  Today’s price action was guided by a disappointing performance by the FTSE’s consumer goods sector, which dropped 2.10 percent. Unilever PLC (ULVR LN), one of the U.K.’s largest manufacturers of branded and packaged consumer goods,  lost 5.19 percent. Also noteworthy was Barclays PLC, which dropped 4.66 percent to finish at 324.00 in London.

CAC 40                     3,764.19                  +3.47                 +0.09%

The CAC 40 managed to finish up 3.47 points, or 0.09 percent, to close at 3764.19. Despite testing the psychologically significant 3800 level during intraday trading, the French index retraced following the central bank announcements discussed above. Out of the index’s ten sectors, five finished higher.  The industrial sector benefitted from the encouraging German Factory Orders figure, adding 0.96 percent. The sector’s top performer was EAAD FP, an airplane and military equipment manufacturer; the company’s share price gained 2.95 percent to close at 18.68. Following up from yesterday, Electricite de France (EDF) retraced part of Wednesday’s gains, giving back 1.02 percent. Recall that French Finance Minister Christine Lagarde announced that power rates in the country will rise by 3 percent for households and 4-5.5 percent for companies on August 15th

DAX 30                        6333.58                    +2.25           +0.04%

On Thursday, the DAX 30 again tested the 6380 level, which has served as significant resistance since this April. After reaching an intraday high of 6382.56, the DAX retreated late in the session and closed at 6333.58, just 2.25 points, or 0.04 percent, higher. The DAX 30 as a whole was unable to hold onto its early gains following the encouraging domestic Factory Orders report, but the industrials and basic materials managed to lock in substantial gains (1.05 percent and 1.00 percent, respectively). Siemens AG led the industrial sector, finishing up 1.46 percent to close just below its 52-week high at 78.00. Deutsche Telekom dragged the broader index lower, losing 2.76 percent to end the trading session at 10.21.

IBEX 35                     10840.30                   -3.30                -0.03%

Like its European counterparts, the IBEX 35 finished nearly even after Thursday’s trading session. Despite trading 100 points higher at 11:00 GMT, the Spanish index gave back a modest 3.30 points, or 0.03 percent, to close at 10840.30. The index’s financial sector, which accounts for over 40 percent of the broader IBEX’s weight, finished up 0.09 percent. Banco Santander, the nation’s largest bank and the index’s largest holding, gained 0.29 percent to close at 10.38. Both the utilities sector and the consumer services sector weighed on the index, losing over 0.30 percent each.

S&P/MIB                        21302.97                    -163.47                  -0.76%

After trading above the 21550 mark intraday, the Italian index lost over 163 points, or 0.76 percent, to close at 21302.97. The MIB may soon surpass the IBEX 35 as the worst performing major European index year-to-date; it is currently down 8.37 percent in 2010.

Written by Jay B. Steinberg and Christopher Vecchio, CFD Trading Analysts
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

European Equities Mixed, Buoyed by U.S. Recovery Optimism

Europe Session Key Developments

• European Equity Indices Begin Lower But Finished Mixed by Day’s Close
• Tomorrow’s Event Risk Should Prove to be Market Moving for Equities

European Equities Mixed, Buoyed by U.S. Recovery Optimism

European equity markets saw their rally stemmed as global data shook investor sentiment regarding a full recovery. Early in the Euro session, Chinese officials announced that regulators are preparing for a steep decline in housing prices, totaling up to potentially 60 percent of value losses on real estate values. However, at the end of the trading day Wednesday, investors found silver lining in reports coming from the United States, which showed expansion in the U.S. service sector. The ISM Non-Manufacturing Composite, an index which measures the rate of expansion or contraction in the service industry, expanded to 54.3 in July from 53.8 in June. According to Bloomberg, the median expectation was that the composite would fall to 53.0. Overall, the FTSE, IBEX, and S&P/MIB lost less than 0.30 percent each, while the CAC and DAX were up by more than 0.35 percent, respectively.

Looking ahead to tomorrow, there is a flurry of economic data that will prove market moving. German Factory Orders for June are expected to show expansion by 1.4 percent. However, the Bank of England and European Central Bank Rate Decisions will prove to be more market moving. While both central banks are expected to leave rates on hold, investors will pay attention to the rhetoric employed, in order to gauge the strength and confidence of the recovery.

FTSE 100                      5386.16                   -10.32               -0.19%

The FTSE 100 finished another 10.32 points lower, or 0.19 percent, to close at 5386.16 after intraday trading. The British index was largely mixed, with five sectors finishing higher and five losing ground on Wednesday. The telecommunications sector was the top performer, adding 0.95 percent; it was led by Vodafone, which finished up 1.32 percent to close above 150. The FTSE was weighed by its financial sector, which gave back 0.64 percent. Standard Charter’s performance was particularly disappointing; the company’s share price retraced 5.18 percent despite reporting a 10 percent increase in 1H profits.

CAC 40                     3,760.72                  +13.21                 +0.35%

Despite its British counterpart’s weakness, the French CAC 40 managed to finish higher despite being down nearly 25 points during today’s trading session. The CAC has been trending higher since the middle of June when it reached a low of 3321. The index was led higher by its utilities and health care sectors, which added 1.22 and 1.13 percent, respectively. However, the best performer on the day was Electricite de France, or EDF SA, which gained 5.48 percent today after the French Finance Minister Christine Lagarde announced that power rates in the country will rise by 3 percent for households and 4-5.5 percent for companies on August 15th.

DAX 30                        6331.33                    +23.42           +0.37%

The DAX 30 added another 23.42 points today, or 0.37 percent, to close at 6331.33. The German index remains the only major European equity index to remain in positive territory year-to-date, now up a remarkable 6.28 percent. Unlike the FTSE 100, the DAX benefitted from an impressive performance out of its health care companies. However, despite adding 1.91 percent during Wednesday’s trading, the healthcare sector comprises only 3.12 percent of the broader DAX index and therefore, was not the predominant market mover. The utilities and basic materials sectors, which combine for roughly a third of the index’s weight, gained 1.12 and 0.94 percent respectively. The only losing sector was the industrial sector, which was dragged down by Siemens AG, losing 1.17 percent.

IBEX 35                     10843.30                   -28.10                -0.26%

The IBEX 35 finished down only 28.10 points, or 0.26 percent, to close at 10843.30 after falling to near 10750 during intraday trading. The index managed to post somewhat of a rally during the opening hours of the US session. The financial sector, which accounts for over 40 percent of the IBEX’s weight, closed down 0.44 percent. Both the telecommunications and utilities sectors finished near even, losing 0.06 and 0.04 percent, respectively. The Spanish index remains the worst performing major European index year-to-date, down over nine percent. However, with that said, the IBEX has rebounded from a low of near 8700 in the beginning of June.

S&P/MIB                        21466.44                    -31.88                  -0.15%

The Italian index gave back 31.88 points, or 0.15 percent, to close at 21466.44 after Wednesday’s trading session. Despite its impressive performance in the last two months, the MIB remains down over seven percent year-to-date.

Written by Jay B. Steinberg and Christopher Vecchio, CFD Trading Analysts
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

European Equities Gain Now That Stress Test Uncertainty is Gone – Or is it?

Europe Session Key Developments

• Investors Continue to Digest Friday’s Stress Test Results
• Newfound Risk Appetite Drives Equities Modestly Higher

European Equities Gain now that Stress Test Uncertainty is Gone – Or is it?

The Committee of European Banking Supervisors’ bank stress tests failed to trigger the price action many had expected from the long-awaited report. Perhaps this was a result of the convenient timing of the release, which was after Friday’s close of the European equity markets, when only North American traders had just a few illiquid hours to digest all 55-pages. However, even after the weekend, investor sentiment was still largely undecided regarding the results of the bank stress tests.

Many investors have questioned the accounting practices employed by the CEBS, which has led to questions regarding the “stressfulness” of the stress tests. The methodology used in the test ignored the possibility of a sovereign debt default, as officials claimed the European Union would never allow for such an event to occur. Recall that, according to Friday’s report, only seven of the 91 banks tested failed had failed; five of the seven were Spanish Cajas, one was an already nationalized Greek bank, and the last was the government-controlled German Hypo Real Estate. To some, it seems unreasonable that in the event of an “adverse scenario” (the situation devised by the CEBS to represent the worst ‘what-if’ imaginable), only one Greek bank would fail in light of the nation’s recent sovereign debt crisis. Regardless, countless officials in Europe have praised the test and asserted that it proves the “robustness” of the European financial system.

European equities responded Monday by closing higher across the board, though the sustainability of such a move is still in question. It will be interesting to see if any form of rally will surface on the (allegedly) more stable economic playing field. Here’s how the specific indices performed:

FTSE 100                      5351.12                   +38.50               +0.72%

The FTSE 100 finished another 38.50 points higher, or 0.72 percent, to close at 5351.12 after intraday trading. The British index’s recent performance has been impressive, as it is only down 1.14 percent on a year-to-date basis. The index was led higher by its financial and oil & gas sectors, which gained 1.66 percent and 1.44 percent respectively. The financial sector, which accounts for over 20 percent of the entire FTSE 100, was led higher by Barclays PLC, which gained 4.52 percent today. The announcement that embattled BP chief executive Tony Hayward would step down sent the company’s stock markedly higher, gaining 4.60 percent. The index’s Health Care sector was the main underperformer, losing 0.94 percent, led by Glaxo’s 1.26 percent retracement.

CAC 40                     3,636.18                  +29.13                 +0.81%

The CAC 40 index closed 29.13 points higher, or 0.81 percent, after Monday’s trading session. The French index was led by its impressive financial sector, which gained a remarkable 2.92 percent today. The sector’s performance is likely attributable to Friday’s bank stress test results, in which no French banks failed. Societe Generale was the most impressive individual performer, managing to gain 5.24 percent. Shares of BNP Paribas added 2.37 percent today to close at an even 51.00, back above the midpoint of its 52-week range.

DAX 30                        6194.21                    +27.87           +0.45%

The DAX 30 added another 27.87 points today, or 0.45 percent, to close at 6194.21. The German index remains the only major European equity index to remain in positive territory year-to-date, up 3.97 percent. As was the case with the FTSE and the CAC indices, the DAX was led higher by its financial sector. The sector gained 1.19 percent intraday, led by Commerzbank, which added 3.46 percent. The financial sector’s success can also be attributed to Friday’s CEBS report; Hypo Real Estate was revealed to be the only German bank to fail the stress test. The index’s basic materials sector was the worst performing sector; it lost 0.35 percent on Monday.

IBEX 35                     10506.70                   +118.50                 +1.14%

The IBEX 35 was the top performing European equity index on Monday, adding over 118 points, or 1.14 percent, to close back above 10500. The Spanish index is particularly vulnerable to the performance of its financial sector, which comprises over 40 percent of the entire index by weight. As such, today’s dramatic increase is not surprising; financial service companies and banks outperformed across the board today. BBVA was a noteworthy performer, adding 2.54 percent to close at 10.09. Banco Santander, the nation’s biggest bank, gained 1.04 percent. The only sector to finish lower was basic materials sector, which lost 0.70 percent.

S&P/MIB                        20819.96                    +215.88                  +1.05%

The Italian index gained a remarkable 215.88 points, or 1.05 percent, following the results of the CEBS’ stress tests. All Italian banks managed to pass, which sent to the MIB higher Monday. Despite its recent surge above the psychologically significant 20000 level, the index remains down 10.45 percent year-to-date.

Written by Jay B. Steinberg, CFD Trading Analyst
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

European Equity Trade Mostly Lower Amid Corporate Earnings Season, Stress Test Drama

Europe Session Key Developments

• Equities Respond to Corporate Earnings as 2Q Results Continue to Emerge
• Investors Remain Uncertain Regarding the Upcoming Bank Stress Tests

European Equity Trade Mostly Lower Amid Corporate Earnings Season, Stress Test Drama

European Markets finished generally lower after Tuesday’s trading session as corporate earnings reports continue to disappoint and investors begin to fear the results of the bank stress tests due for release on July 23rd. As has been a continuing trend throughout the second quarter earnings season, companies seem to be missing estimates on their revenue figures, inciting fears that demand remains low and the economic recovery may not be as sustainable as originally believed. In the last 24 hours alone, blue chip firms such as Goldman Sachs, International Business Machines, and Texas Instruments have reported weaker-than-expected revenue figures. Companies that managed to beat EPS estimates have seen declines in their respective share prices. As a result, many of the major indices tested significant psychological barriers during intraday trading Tuesday. Nearly all of last week’s gains have been retraced as investors tone down their demand for riskier asset classes such as equities in favor of safe-haven assets, i.e. U.S. Treasuries. Bond yields in the United States have been falling in recent days, possibly in response to growing uncertainty surrounding the bank stress tests set to come out later in the week. A rumor emerged yesterday that Hypo Real Estate, a German bank nationalized during the financial crisis, was the first company to fail the stress test. The report sent shockwaves through the market as investors anticipate the other 91 stress tests due for release. Looking ahead, expect price action to remain choppy as investors avoid risky investment leading into Friday’s big announcement.

FTSE 100                      5139.46                   -8.82               -0.17%

Despite testing the 5100 level during intraday trading, the FTSE 100 finished nearly even. On Tuesday, the index lost just 8.82 points, or 0.17 percent, to close at 5139.46. As of today’s closing bell, the English index has completely retraced its gains from a week ago, when optimistic earnings reports and a return of risk appetite sent the index higher towards 5300. The basic materials sector’s performance was an impressive outlier; it managed to gain 2.87 percent on the day (the financials sector was the only other index to close higher). A 4.08 percent gain in Rio Tinto PLC’s stock price was the sector’s leading performer, though all thirteen companies closed in the black.

CAC 40                        3,468.02                   -18.31                 -0.53%

After opening nearly 20 points higher, the CAC 40 index fell sharply past the psychological 3500 level to close down 18.31 points, or 0.53 percent, to 3468.02. The French index had actually plummeted all the way to 3420 before retracing during the opening hours of the US session. Though not as notably as its English counterpart, the CAC index was led by its basic materials sector. It gained 0.71 percent Tuesday, led by Arcelormittal, which gained 2.13 percent. The financial sector was a disappointment (down 0.36 percent), dragged lower by BNP Paribas, which closed below 47 after peaking near 52 during last week’s rally.

DAX                             5967.49                    -41.62             -0.69%

On Tuesday, the DAX 30 index crossed below the psychological 6000 level for the first time since its impressive rally beginning July 7th. The German index, which has been the best performer among the major European equity indices this year, lost 41.62 points, or 0.69 percent, to close at 5967.49 today. The DAX now sits just 0.17 up on a year-to-date basis; it is the only index that can boast any gains in 2010. The consumer goods sector was the biggest loser on the day, giving back 1.37 percent as a whole. Daimler AG dragged the sector and entire index lower, losing 2.84 percent during intraday trading. The utilities sector was the only one that closed higher, gaining 0.23 percent. However, this sector only comprises roughly twelve percent of the total index and as such, was unable to counteract the broader decline.

IBEX 35                     10061.30                   +131.50                 +1.32%

The IBEX 35 was the outstanding performer on Tuesday, earning the title of the only major European equity index to finish higher. The Spanish index actually managed to a significant gain, adding 131.50 points, or 1.32 percent, to close back above the significant 10000 level at 10061.30. More than one third of the IBEX’s total increase can be attributed to its largest component, Banco Santander, which gained 2.13 percent during intraday trading. SAN alone comprises 22.91 percent of the entire IBEX 35, which makes the broader index particularly vulnerable to the bank’s performance. The health care and consumer goods sectors were the only two that finished lower on Tuesday, losing 1.60 and 0.07 percent respectively.

S&P/MIB                        19985.32                    -132.22                  -0.66%

The Italian index lost 132.22 points, or 0.66 percent, to close back below the 20000 level at 19985.32 on Tuesday. The index has now lost over 14 percent year-to-date, which is approaching the losses incurred by the IBEX 35 (-15.73 percent YTD) as the largest among all the major European equity indices.

Written by Jay B. Steinberg, CFD Trading Analyst
For Questions/Comments, please contact him at JSteinberg@fxcm.com

DAX

European Equities Retrace as Risk Appetite Wanes

Europe Session Key Developments

• Dovish FOMC Comments Lead to a Slowdown of Risk Appetite
• Earnings Reports Continue to Drive Equity Performance
• Disappointing Manufacturing Figures out of the US Hurt Equities

European Equities Retrace as Risk Appetite Wanes

All major European equity indices retraced Thursday as investors seemingly lost confidence in the notion of a sustained global economic recovery following dovish Federal Open Market Committee’s meeting minutes and multiple disappointing economic indicators. After the closing bell had sounded on the European session, the FOMC released the minutes for its previous meeting that revealed a somewhat dim outlook for the world’s largest economy. Traders could be seen drawing their money out of riskier assets and into safer investments, such as US treasuries, whose yields fell today. Even a better-than-expected earnings report from JP Morgan was unable to stimulate demand for equities. The bank posted $1.09 2Q EPS, which far exceeded analysts’ expectations of just 70 cents per share. As it turns out, the real market-moving economic release was not until late in the European session, when a slew of economic indicators out of the U.S. sent stocks permanently lower. The United States’ Empire Manufacturing figure for July came in at 5.08, far below an expected 18.00. The Philadelphia Fed’s survey figure was also disappointing, coming in at 5.1 vs. 10.0 expected. These statistics, when combined with yesterday’s disappointing Retail Sales figure and today’s dovish FOMC commentary, likely explain why equities fell back today. It remains to be seen if the European equity indices can hold on to their gains from earlier in the week or if they will continue to decline.

FTSE 100                      5211.29                   -42.23               -0.80%

The FTSE 100 fell for the second straight day, dropping over 42 points, or 0.80 percent, to close at 5211.29. The index had traded slightly higher intraday, but closed noticeably lower after disappointing manufacturing reports from the United States restored concern over the sustainability of the global economic recovery. The FTSE was dragged downward by both the basic materials and financials sectors, which closed 2.11 percent and 1.44 percent lower, respectively. Rio Tinto PLC’s performance was particularly disappointing; the company’s share price dropped 3.32 percent to close at 3030.50. The health care sector was the only sector to finish higher Thursday, managing to post a 0.57 increase. It was led by GlaxoSmithKline, which benefitted from the news that its drug Avandia would be allowed to remain on the market.

CAC 40                          3,581.82                  -51.16                 -1.41%

The CAC 40 index lost over 50 points on Thursday, or 1.41 percent, to close back below 3600 at 3581.82. Though all sectors finished lower by day’s end, the French index’s financial sector took the biggest hit, giving back 3.06 percent after its impressive gains from earlier in the week. BNP Paribas continued its descent from yesterday; the company’s share price fell by over four percent today, completely retracing its gains from Tuesday and then some. It is now trading below the midpoint of its 52-week range after closing at 48.71.

DAX  30                         6149.36                    -60.40             -0.97%

The DAX 30 ended down nearly a full percentage point Thursday after falling 60.40 points to close at 6149.36. As was the case with the other major European equity indices, the German index was dragged down by its lagging financial sector, which lost 1.66 percent. All components of the DAX finished lower Thursday except for the lone telecommunication stock, Deutsche Telekom. The company’s share price added 0.99 percent to close at 10.18. The DAX 30 remains the lone major index that is still in positive territory on a year-to-date basis.

IBEX 35                       10160.20                   -118.30                 -1.15%

The IBEX 35 followed other major European equity indices lower Thursday, losing 118 points of its own, or 1.15 percent. The Spanish index suffered largely in part to a 2.14 percent decline in its financial sector. Note that movements in the IBEX are particularly sensitive to the performance of its financial components, as the sector in particular comprises over 40 percent of the entire index. Not surprisingly, Banco Santander’s 2.45 percent decline Thursday accounted for a 58.79 point drop, or nearly half, of the index’s losing performance. SAN shares are now trading at 9.87, just above the midpoint of its 52-week range of 7.22-12.14.

S&P/MIB                   20480.08                    -324.29                  -1.56%

The Italian index was the worst performing major European equity index today, losing over 324 points, or 1.56 percent to close at 20480.08. Over the past two trading sessions, the MIB has retraced a portion of its gains from earlier this week. It remains down almost 12 percent year-to-date.

Written by Jay B. Steinberg, CFD Trading Analyst
For Questions/Comments, please contact him at JSteinberg@fxcm.com

Next Page »