European Equities

European Equity Markets Get a Boost from Encouraging Corporate Earnings Reports

Europe Session Key Developments

• Optimistic Earnings Reports Drive European Equity Indices Higher
• Strong Greek Auction Encourages Investors to Take on Risk
• Downgrade of Portugal Has Little Effect on Market Performance

European Equity Markets Continue to Rebound as Earnings Season Rages On

European Markets closed higher across the board again today, as all the major indices closed up nearly two percent after today’s trading. Despite a relatively quiet day of fundamental economic releases, the session was filled with market-moving news reports that guided investor sentiment. After yesterday’s closing bell in the US, Alcoa Inc. started the earnings season off on the right foot by beating analyst expectations by one cent. This morning, traders were seen shifting their investment to riskier asset classes after Greece held its first debt auction since the European Union’s bailout package in May. Greece sold 1.625 billion Euro worth of 6-month instruments yielding 4.65 percent; the demand for Greek debt was seen as generally encouraging and managed to restore confidence in the region. Even Moody’s downgrade of Portugal’s credit rating to A1 was not enough to put off investors who seemed determined to send equities higher. The rating agency’s action was not considered particularly surprising or particularly indicative of the health of the broader European market. Looking forward, the remainder of the 2Q earnings season will likely guide equity prices. If corporate earnings can successfully restore investor confidence in the economic recovery, expect all the major indices to continue to push higher.

FTSE 100                      5271.02                   +104.00               +2.01

The FTSE 100 index posted its sixth straight day of gains today, closing up over two percent at 5271. All ten sectors that comprise the index rose, but increases in the Industrial and Financial sectors were particularly noteworthy (2.54 percent and 2.33 percent, respectively). Barclays PLC managed to add 4.22 percent to close at 312.60. Despite the index’s recent turnaround in the last week, it remains down 2.62 percent on a year-to-date basis. However, continued optimism throughout the earnings season could push the FTSE even higher.

CAC 40                     3,637.76                   +70.10                 +1.96%

The French CAC 40 index joined other European equity indices today by closing almost two percent higher as renewed optimism drives risky assets higher. All ten sectors in the CAC rose during intraday trading, with the financial sector posting the most impressive gain of 2.92 percent. The technology sector was the laggard, gaining only 0.91 percent on the day. BNP Paribas, the index’s largest banking company, gained almost three percent to close at 51.45, now above the midpoint of its 52-week range. Expect the CAC to follow trend with other European equity indices throughout the remainder of the week.

DAX                               6191.13                    +113.94             +1.87%

The German DAX added nearly 114 points to close up 1.87 percent during today’s trading session. The DAX has proven to be the strongest major European equity index of 2010; it is the only one to remain in positive territory YTD, boasting 3.92 percent gains. The index was led higher by a very strong consumer goods sector that increased by 4.55 percent.  The automobile companies, BMW, Daimler AG and Volkswagen were particularly impressive, gaining 8.29, 5.39, and 5.16 percent, respectively.

IBEX 35                     10259.50                   +201.30                 +2.00%

The Spanish IBEX 35 gained exactly two percent today, benefitting from the common market themes that pushed all European equity indices higher. The index was pushed higher by noteworthy gains in consumer services and financial sectors, but gains were muted by declines in both the technology and consumer goods sectors. Banco Santander, the nation’s largest bank, accounted for nearly one quarter of the index’s intraday performance. SAN added 2.47 percent to close at 10.13. If earnings reports continue to impress, expect further gains for the IBEX.

S&P/MIB                   20851.85                    +333.93                  +1.63%

The Italian index managed to close higher yet again, gaining 333.93 points, or 1.63 percent, in today’s trading session. Despite being down nearly 10 percent YTD, the MIB has staged an impressive rally in the last week, gaining almost eight percent. The index was led higher today by Fiat’s 3.5 percent gain; the company’s share price closed at 9.31.

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

European Equities

European Equities Cap Biggest Weekly Gain Since July

Europe Session Key Developments

•    French Data Generally Disappoints, Euro-Zone and German Data Show Improvement in Manufacturing
•    Commodities Trade Sideways After Fed Raises Discount Rate
•    Euro Gains Versus Greenback For Second Time This Week, Pound Falls To Nine-Month Low

Stocks in Europe extended their largest weekly gain since July as manufacturing data for Germany and the general euro zone beat expectations.  The Dow Jones Stoxx 600 Index, a broad measure of European equities, rose 0.5 percent to increase its weekly gain to 3.9 percent.  After initially trading lower on yesterday’s unexpected news of Fed tightening, European shares rallied collectively on strong economic data from Germany, Italy, and the general euro zone.  Germany announced that the country’s PMI manufacturing index unexpectedly rose from 53.7 to 57.1 in February, while industrial orders in Italy trumped expectations by rising 10.1 percent in 2009.  Furthering bullish sentiment was a report that the euro area’s PMI manufacturing index and PMI composite index beat expectations for December.  As for commodities, crude oil ticked slightly higher as it approached $80 a barrel, while metals surprisingly held at yesterday’s closing levels despite the unexpected hawkish maneuver of the Federal Reserve.  During after-hours yesterday, the Fed increased the discount rate for the first time in three years, but markets managed to shake off the tightening as Chairman Bernanke’s commentary maintained that the Federal Funds Rate would remain at historic lows for the time-being.  Yesterday, the greenback immediately spiked higher against its European counterparts after the Fed decision, but during today’s session the Euro managed to rally against the Dollar for only the second time this week, rising to $1.3613 at the time of this writing.  The sterling, however, continued its slide against the American currency, falling to a nine-month low on the session.  Overall, the U.S. Dollar Index rallied intraday above 81.30, and closed near a seven-month high.

FTSE 100                         5358.17                     +33.08                     +0.62%
British stocks posted their ninth gain in the last ten days, led by consumer goods which gained 1.7 percent.  At least two stocks gained for each that fell on the FTSE today, as better-than-expected retail sales over the twelve months ended in January boosted investor sentiment.  Unilever was the biggest gainer among consumer goods companies, adding 2.6 percent on the session, while tobacco firms British American and Imperial added over 2 percent each.  British American received a boost from analysts at Nomura, yesterday, who raised their price target on the company’s shares.  The only sector to close lower today was basic materials, hurt by a 1.8 percent decline for Anglo American after the mining company posted a 53 percent decline in net annual profit.

CAC 40                             3769.54                     +21.71                     +0.58%
French equities gained over 0.5 percent today, despite weak economic data for the country.  Investors managed to shrug off a drop in business confidence for February as well as worse-than-expected PMI numbers for the month.  The leading sectors today were technology, financials, and utilities, which each added at least 0.8 percent.  Vallourec, a tubular technology firm, posted the biggest gain on the CAC, adding over 2 percent on the day.  Following closely behind were Lagardere, Credit Agricole, and Vivendi, which each gained at least 2 percent on the session.  Overall, twenty-nine of the forty CAC stocks closed higher in the week’s final day of trading.

DAX                                   5722.05                        +41.64                     +0.73%
The German index extended its longest winning streak this year as strong manufacturing data increased risk appetite and lead stocks higher.  Consumer goods led the way with a 2 percent gain, while technology and consumer services shares added at least 1.3 percent each.  Automobile producers were the strongest group among the consumer goods sector as BMW gained 3.4 percent and Daimler added 2.5 percent.  Technology shares were led by a 1 percent gain for Infineon and SAP.

IBEX 35                          10676.70                     +102.50                 +0.97%
Shares in Spain added nearly a full percent today, led by a 3 percent gain in health care shares and a 2.4 percent rise in consumer services.  Bolsas Y Mercado was the strongest performer on the index, adding 3.8 percent, while Grifols closed right behind, up 3 percent.  Thirty-three of the thirty-five index stocks closed higher in the week’s final day of trading, with Gamesa and Acerinox being the only two exceptions.  Gamesa shares fell despite a decision to rehire 79 laid-off employees.

FTSE MIB                     21722.33                     +86.21                   +0.40%
Italy’s FTSE MIB posted the smallest gain among major European indicies, despite a strong industrial orders report.  The report showed that industrial orders unexpectedly rose 4.7 percent in December and 10.1 percent for the year.  Trading in Milan led to a strong showing for EEMS Italia, which gained 6 percent after Intermonte Sim reiterated a “buy” rating on the company.  Italian carmaker Fiat also posted a strong gain of 2.3 percent, after Cheuvreux said that Fiat’s profit targets are not out of reach despite weakness in the automobile sector.

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

European Equities

European Equities Mixed Today as Plans For Greece Bailout Remain Unclear

Europe Session Key Developments

•    European Union Officials Discuss Budget Concerns in Brussels Today
•    Switzerland Consumer Prices Rise More Than Expected in January
•    Euro Resumes Decline Against Dollar as Greece Plans Remain Unclear

European stocks were mixed today as rhetoric from the European Union meeting in Brussels was unclear regarding its agreement to solve the Greek debt situation.  EU leaders have asked for a descriptive plan from Greece on how the country intends to reduce its debt-to-GDP ratio, but no concrete bailout plan has been announced.  The general consensus from analysts is that a bailout will happen in the near-future, to protect the Euro region and maintain the stability of its currency.  ECB President Jean-Claude Trichet said today that he welcomes the commitment of EU leaders to take the necessary actions to protect financial stability in the region.  President Trichet, along with German Chancellor Angela Merkel and Greek Prime Minister George Papandreou, has called for a close watch of the Greek economy and promised “determined” action to heed off the worst crisis for the euro currency in its eleven-year history.  Despite the commentary, investors showed a great deal of skepticism over today’s Greece agreement, sending four of the five major European equity indices lower on the trading day.  In addition, the euro currency continued its decline against the U.S. dollar, falling against the greenback for a sixth time in the last seven trading days.  The sixteen-nation common currency has dropped over 5 percent against the Dollar this year.  As for the economic docket, German wholesale prices rose 1.3 percent in January and Swiss CPI was slightly higher for the month, but neither had much impact on equities.  Looking ahead to tomorrow, however, economic data should have a major impact on market sentiment as fourth quarter GDP data is released for Germany, France, Italy, and the general Euro-Zone.

FTSE 100                        5161.48                     +29.49                     +0.57%
The FTSE 100 posted the only gain among the major European indices, led by gains in commodities and industrials.  Commodity producers gained on rising energy costs, as crude oil has increased to $75 a barrel this week.  Rio Tinto, one of the world’s largest mining companies, gained 2 percent on rising oil prices and a reinstatement of the firm’s dividend.  Rolls-Royce led industrials higher, gaining over 6 percent after reporting annual profit that beat analyst estimates and an announced payout to investors after winning more defense contracts.  Also pushing the index higher was Sports Direct International, the largest U.K. sporting-goods retailer, which gained nearly 8 percent on positive sales reports.

CAC 40                            3616.75                     -18.86                     -0.52%
Trading in Paris led to a slight decline on the trading day as technology stocks fell over 4.2 percent.  Overall, over two stocks fell for each that gained on the CAC.  Alcatel-Lucent was the worst performing stock on the index, falling 11 percent after posting its third successive full-year loss.  The global telecommunications company also cut its profit-margin target for 2010.  Renault posted the second-biggest decline on the index, dropping over 5 percent, after the French car maker announced that it posted a net loss of $4.2 billion in 2009.

DAX                                 5503.93                     -32.44                     -0.59%
The German index posted its first decline this week as eight of the ten DAX sectors closed lower on the day.  Financial shares posted a 1 percent decline on the day as the country’s largest bank, Deutsche Bank, dropped over 2 percent and Deutsche Postbank fell over 1 percent.  German banks have significant exposure to Greece, Spain, and Portugal, and investors remain skeptical that the regional debt problems have a viable solution.  Furthering the decline in German stocks was the automobiles sector, led by a 2 percent decline for Daimler and Volkswagen.

IBEX 35                          10281.70                    -173.30                   -1.66%
Trading in Spain led to the largest decline among the major European indices, as financials plunged over 2.2 percent on concerns over the country’s debt problems and lacking economic recovery.  The National Institute of Statistics announced today that the country’s GDP fell 3.1 percent in the fourth quarter on an annual basis and slowed 0.1 percent on a quarterly basis.  Construction firms were hit especially hard today on spending concerns, as FCC and Ferrovial each fell over 2 percent.

FTSE MIB                       21076.45                   -165.18                   -0.78%
Italy’s FTSE MIB posted the second-largest decline among major European indices, declining nearly a full percent on the day.  The most actively traded stocks to the upside included the country’s largest oil company, Eni, which added nearly 1 percent on rising oil prices, and Saipem, which gained 3 percent after analysts upgraded their recommendations on the stock.  On the losing end of trading today was Parmalat, as the dairy company fell over 2 percent after being cut at BNP Paribas from “neutral” to “underperform.”  Analysts at the bank said to avoid the stock before its February 25^th earnings release.  Also declining today was Intesa Sanpaolo, falling 3 percent after announcing plans to shut down its investment-banking unit in Athens.

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

European Equities

European Equities Rebound From Worst Week Since March

Europe Session Key Developments

•    Spain, Greece Leaders Say Debt Concerns Are Overdone
•    Commodities Higher Across The Board
•    Euro Gains Against U.S. Dollar, Cable Lower

European stocks rallied today, off their worst week of the year, on an apparent return of risk appetite.  Investors drove commodities and stocks higher during the European session, and sold off U.S. Dollars in favor of the Euro.  Investors may be viewing the Euro as oversold after the past week, as the 14-day Relative Strength Index fell below 30 over the past few sessions.  On the commodities front, crude oil gained nearly 1 percent to $72, while gold and silver added nearly 2 percent each.  Over the past few days, European leaders have attempted to ease the minds of investors by showing support for the efforts of Greece, Spain, and Portugal as they fight their large budget deficits.  French Finance Minister Christine Lagarde told reporters over the weekend that European member of the G-7 will make sure the sovereign debts are managed.  ECB President Jean-Claude Trichet stated his belief that Greek debt will be reduced to a manageable 3 percent of GDP by 2012, while Greek Prime Minister George Papandreou reiterated his stance that Greece can handle its own deficit and that foreign aid would only serve as a poor signal to the market.  Papandreou is currently waging a battle against organized labor unions in his attempt to freeze wages and implement spending cuts.  His efforts have helped to a point, as credit-default swaps on Greek sovereign debt fell from last week’s record 428 basis points.  However, swaps on the country rose today by 12.5 basis points to 420 as over 600,000 public workers plan to strike for 24 hours on February 10.  In addition, despite chatter from the Spanish Finance Minister to quell investor fears, credit-default swaps on the sovereign debt of Spain and Portugal again rose to record highs today.  Swaps on Spain gained 4.5 basis points to 171, and swaps on Portugal increased 15 basis points to 242.

FTSE 100                      5092.33                    +31.41                     +0.62%
British stocks rose today from three-month lows, led by near 2 percent gains in basic materials and consumer goods.  Basic materials shares traded higher on rising metals costs and better-than-expected earnings from Randgold Resources.  The mining company added over 6 percent today after announcing that its four-quarter profit was significantly higher than estimates.  Copper producer Xstrata also posted better-than-expected earnings and gained over 3.6 percent on the session.  Xstrata also announced that it would resume paying a dividend to shareholders for the first time since 2008.  Consumer goods were led higher today by the world’s second-largest brewer, SABMiller, and chocolate-maker Nestle.  SABMiller gained 3 percent today, while Nestle added more than 2 percent.

CAC 40                           3607.27                   +43.51                    +1.22%
Trading in Paris led to the biggest gain among all the major European indices today after the Bank of France business sentiment reading rose to 104 in January from 102 the month prior.  Each CAC sector gained today with the exception of technology shares, and twenty-seven of the index’s forty stocks closed higher.  The top performer was Dexia, which gained over 4.5 percent following four consecutive days of losses.  The bank’s shares were bid higher after an announcement that Dexia will not need to sell any specific units to gain approval for a taxpayer bailout.

DAX                                 5484.85                     +50.51                  +0.93%
The DAX gained nearly a full percent during trading today as twenty-three of the thirty index stocks rose on the session.  Daimler was the best performer on the index, gaining over 3 percent after Wolfgang Bernhard was appointed to the head production position at Mercedes-Benz.  Deutsche Telekom also helped to lift the index, adding 1.8 percent after its shares were upgraded by WestLB.  The telecom firm is considering new possibilities for its T-Mobile unit, including an initial public offering in the U.S.  Other positive gains came from Germany’s largest two utilities, E. ON and RWE, which rose in tandem for the first time in four days.  SAP was the worst performer on the index, dropping over 2 percent after CEO Leo Apotheker resigned.

IBEX 35                           10206.30                   +103.00                 +1.02%
Spanish stocks rebounded after a terrible week, gaining over 1 percent as telecom and bank shares rallied.  Banco Santander gained nearly 2 percent, while BBVA added 0.5 percent after Spain’s Deputy Finance Minister Jose Manuel Campa talked down the country’s budget deficit.  Campa said that the government will take the necessary steps to cut the budget deficit with a targeted deficit of 3 percent of GDP in 2013.  The Finance Minister also stated his projection for 3.1 percent growth in 2013.  Telefonica gained over 2 percent today on news that the telecom operator is considering levying a fee on internet search engines such as Google and Yahoo for use of the network.

FTSE MIB                        20938.24                   +122.36                 +0.59%
Trading in Milan today led to the first gain for the FTSE MIB in four days, albeit the smallest among major European indices.  Gewiss gained over 3 percent on news that the electrical product manufacturer expects sales to improve next year to levels not seen since 2008.  Drugmaker Recordati gained over 1 percent, after two losing sessions, on news that the firm is looking at new acquisitions in eastern Europe and will report that 2009 earnings exceeded those of the prior year.  Defense contractor Finmeccanica fell over 4 percent after Goldman Sachs cut its price estimate on the firm and maintained its “sell” recommendation.

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

European Equities

European Equities Plunge on Debt Concerns

Europe Session Key Developments

•    Concerns Growing Over Debt Problems in Greece, Spain, Portugal
•    Bank of England and European Central Bank Maintain Low Interest Rates
•    Commodities Plunge Lower, U.S. Dollar Gains Against European Counterparts

European stocks plunged by the most in two months, led by a near 6 percent loss for the Spanish IBEX 35 Index.  Spain has come into the spotlight, alongside Greece and Portugal, on fears that the debt levels of the three nations are unacceptably high and may threaten the broader European Union.  While bond prices rose for nearly all major European nations today on risk aversion, demand for Portuguese and Spanish debt decreased, pushing prices down and yields higher.  Just one day after a disappointing Portugal bond auction, Spain sold 2.5 billion euros of three-year debt today to yield 2.63 percent, 49 basis points higher than the last issuance of such notes on December 3.  Investor also caused a surge in the cost of insuring debt from the troubled nations against default.  Credit-default swaps on Portugal increased 27 basis points to 223, swaps on Greece rose 14 basis points to 411, and swaps on Spain increased 13 basis points to 165.  The debt concerns greatly overshadowed the European Central Bank’s rate decision this morning that held the benchmark interest rate, as expected, at 1.00 percent.  At President Jean-Claude Trichet’s media briefing, the discussion quickly turned towards the at-risk euro area nations.  The ECB President defended the Euro-Zone as a whole, saying the region remained strong despite its troubled components.  He added that the budget shortfall of the region will probably be smaller than those of Japan and the United States at the end of the year.

FTSE 100                      5139.31                    -113.84                     -2.17%
Following the Bank of England’s decision to maintain its benchmark interest rate at 0.50 percent, British stocks fell over 2 percent on renewed debt concerns in the European Union.  Each FTSE sector fell on the day, with the exception of Telecommunications, and nineteen stocks fell for each that gained.  Commodity stocks were hit especially hard today as the price of crude oil fell from back below $74 a barrel after closing above the $77 level following yesterday’s session.  Royal Dutch Shell dropped over 2 percent after its fourth-quarter earnings missed estimates, although Bank of America Merrill Lynch maintained a “buy” rating on the stock.  Telecommunications stocks were the lone bright spot today, led higher by Vodafone, which added over 3 percent on the day.  The world’s largest mobile operator by sales increased its operations in India and lifted its revenue outlook.

CAC 40                           3689.25                   -104.22                    -2.75%
French equities plunged lower today as all forty CAC stocks fell into the red.  Bank stocks Societe Generale, Credit Agricol, and BNP Paribas were the worst performers of the index, each dropping over 5 percent on debt concerns in the EU.  Software companies also took a hit today after Access Commerce and Soft Computing slid 5 percent and 9 percent respectively.  Access Commerce announced that revenue fell in 2009 from the year prior, while Soft Computing reported that fourth quarter revenue fell 6.7 percent.  Dassault Aviation was one of the few gainers on the CAC today, adding over 3 percent after Brazilian President Luiz Inacio Lula da Silva announced his intentions to buy over thirty of the company’s fighter jets.

DAX                                 5533.24                    -138.85                  -2.45%
Trading in Germany led to a steep decline today after factory orders in December fell far short of expectations.  The worst performing sectors were Industrials, Basic Materials, Financials, and Consumer Goods on a day in which all 30 DAX stocks closed lower.  Deutsche Bank, the country’s largest bank, fell over 4 percent after CEO Josef Ackermann said that the economic recovery remains fragile and “by no means self-sustaining.”  Commerzbank also declined, by the largest amount since October, while steelmakers ThyssenKrupp and Salzgitter fell at least 3 percent each on falling metal prices.

IBEX 35                       10241.70                   -646.70                 -5.94%
Spanish stocks plunged today by the most in sixteen months on continued concern over the country’s debt problems.  Financial firms led the decline, falling over 8 percent collectively on concerns that the country’s credit rating may be cut.  Banco Santander, the country’s largest bank, fell over 9.4 percent despite a report of increased earnings.  Industrial shares were not far behind Financials, dropping over 6.8 percent on the day.  Ferrovial, an infrastructure managing firm, fell over 11 percent, while Obrascon Huarte Lain dropped over 9 percent.

FTSE MIB                     21404.82                   -764.43                 -3.45%
Trading in Milan today led to the largest decline for Italy’s benchmark FTSE MIB Index since November 26.  Some of the biggest movers on the index were utility firm A2A, which fell over a percent on decreased earnings, and insurance giant Assicurzioni Generali, which dropped over 4 percent after cutting its 2009 net income estimate.  Telecom Italia, the country’s largest phone company, declined nearly 2 percent as CEO France Bernabe met with government officials regarding a potential merger with Spanish telecom giant Telefonica.

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

European Equities

European Equities End Winning Streak on Weak Data, Debt Concerns

Europe Session Key Developments

•    Concerns Linger Over Debt Problems in Several European Nations
•    PMI Services Data Mixed, Euro-Zone Retail Sales Fall Short of Expectations
•    Commodities Generally Lower, Greenback Gains Against Euro Currencies

European stocks fell today, putting an end to their longest winning streak in three weeks.  Weak Euro-Zone retail sales disappointed investors and concerns lingered over debt problems in several European nations.  Stocks appeared headed for a fourth day of gains after the first hour of trading, but fell quickly after the EU’s statistics office announced that retail sales in the region were unchanged in December, amid expectations for a 0.4 percent gain.  Further downside pressure on stocks came from renewed concerns over debt problems in Greece, Portugal, and Spain.  Greek Prime Minister George Papandreou won European Commission backing for his plan to cut the Greek budget deficit by extending a wage freeze on public workers and raising the fuel-tax.  The plan would hope to cut the current deficit of 12.7 percent of GDP to the EU’s acceptable measure of 3 percent of GDP by 2012.  Investors remain unsure, however, of Greece’s ability to correct its deficit without help from the European Union or International Monetary Fund.  Portuguese debt levels have also come under scrutiny from investors after Portugal’s central bank Governor Vitor Constancio said yesterday that the country would require “difficult” measures to cut its deficit.  During today’s session, the yield premium demanded to hold Portuguese and Spanish 10-year bonds jumped 2 basis points over the equivalent 10-year German Bund.  Credit default swaps on Portugal rose 29 basis points to a record 196, according to CMA DataVision in London.  On the commodities front, energy prices were relatively flat with crude oil holding above the $77 a barrel level.  Gold futures fell approximately 0.3 percent, while silver futures dropped over 1.6 percent during trading.  Investors showed a return to risk aversion and parked their money in U.S. dollars, driving the greenback higher against the Euro and British Pound.  Looking ahead to tomorrow, all eyes will be on interest rate announcements from the Bank of England and European Central Bank.  The central banks are expected to maintain their current rates of 0.50 percent and 1.00 percent respectively.

FTSE 100                      5253.15                   -30.16                    -0.57%
British stocks closed lower for the first time since Thursday as Health Care and Basic Materials shares fell over 1.6 percent collectively.  Health shares were led lower by AstraZeneca, on news that the drug producer faces as many as 26,000 lawsuits over its antipsychotic drug Seroquel.  The company announced plans last week to cut over 10,000 jobs over next four years.  Basic materials declined on falling commodities prices, as major mining companies Rio Tinto, BHP Billiton, and Anglo American dropped at least 1 percent each during the session.

CAC 40                           3793.47                   -18.66                    -0.49%
Trading in Paris led to a slight decline as Financial companies dropped over 1.8 percent.  Credit Agricole, the largest French bank by branches, fell over 3 percent during today’s trading on investor concern over its 16.9 billion euro deficit.  Investment banking giants BNP Paribas and Societe Generale dropped over 2 percent each.  The worst performing stocks on the CAC included video-game maker GameLoft, which fell over 4 percent on a weak fourth quarter sales outlook, and software company Coheris, which dropped 5 percent.

DAX                                 5672.09                    -37.57                  -0.66%
The German Index dropped over 0.6 percent today on poor performance from the Financials, Utilities, and Consumer Services sectors.  Deutsche Boerse was the worst performing stock of Financials, declining over 3 percent after Morgan Stanley cut the stock from “overweight” to “equal-weight.”  Germany’s largest bank, Deutsche Bank, fell 1.7 percent.  RWE led the decline in utilities shares, falling 1.4 percent despite unveiling a new biomass plant under construction in Scotland that would reduce carbon emissions.  European energy utility companies have been hurt by weak demand due to poor economic conditions in the past two years.

IBEX 35                       10888.40                   -252.50                 -2.27%
For a second consecutive day, trading in Spain led to the worst performance of major European indices as debt problems in the country have resurfaced as a major concern for the EU.  Financial shares were the worst performing sector, dropping over 3 percent as the country’s largest banks, Banco Santador and BBVA, fell over 3.8 percent each.  Also lower on the index were Oil & Gas stocks, which pulled back after strong gains to open the week on rising energy costs.  Energy leader Gamesa fell over 3 percent, a day after Wind Energy America completed the commissioning of two Gamesa wind turbines in Iowa.

FTSE MIB                     22169.25                   -244.49                 -1.09%
The Italian benchmark index fell over 1 percent today after the Italian PMI Services Index fell to 50.9, much worse than the 52.9 reading expected.  The most active stocks traded in Milan today included financial firm Banco Popolare, which fell over 2 percent on a trimmed price estimate from Intermonte Sim, and appliance maker Indesit, which fell 5 percent after Bank of America Merrill Lynch discussed possible downgrades in the industry.  Telecom Italia fell over 3 percent on mixed opinions over a takeover of the phone company by Spain’s Telefonica.

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

European Equities

European Equities Advance For Third Day as Commodities Climb

Europe Session Key Developments

•    Mining Companies Trade Higher on Rising Metals Costs
•    Crude Oil Gains For Second Consecutive Session
•    Euro Gains Against Greenback, British Pound Snaps 3-Day Losing Streak

Rising commodity prices led European stocks higher for a third consecutive day, the region’s first three-day winning streak in nearly a month.  Mining stocks led the broad European rally, helping to push the Dow Jones Stoxx 600 Index up 1 percent on the day.  Overall, the index has increased 59 percent since last March as central banks have maintained low interest rates and governments have supplied more than $12 trillion to help stimulate the economy.  The easy-money policies of central bankers have pushed up asset prices around the world- from stocks and commodities to bonds and real estate.  During today’s session, stocks and commodities rose in tandem for a second consecutive day, after the Reserve Bank of Australia surprisingly refrained from raising interest rates.  This helped crude oil surge through $77 a barrel, its highest price since January 21.  Precious metals followed suit, as gold and silver rose 1 percent and 0.2 percent respectively.  The large move in commodities today was mostly based on investor sentiment after the RBA rate decision, as there were no major releases on Europe’s economic docket.  Investors found some encouragement from rising German retail sales in December and a Swiss report that showed consumer confidence beat expectations for January.  Looking ahead, Euro-Zone retail sales and PMI data could move markets tomorrow, but most eyes will be looking ahead to interest rate decisions from the Bank of England and European Central Bank on Thursday.

FTSE 100                      5283.31                   +35.90                    +0.68%
Trading in London today resulted in a 0.6 percent gain as the Basic Materials and Consumer Services sectors added 3 percent and 1 percent respectively.  All twelve basic-resources producers on the FTSE gained today, and the total 3 percent rise was the biggest advance in two months.  Rio Tinto, one of the world’s largest mining companies, gained over 3.3 percent on surging commodity prices and a recommendation from analysts at Citigroup.  British Airways led the rally in Consumer Services, gaining 3 percent on bets that the U.K. airline will be allowed to make controversial changes to cabin crew working practices that could save the company more than 80 million pounds.

CAC 40                           3812.13                   +50.12                    +1.33%
French equities rose for a third consecutive day, led by a 2.2 percent gain in the Industrials sector.  More than four stocks gained for each that fell as the CAC rose to its highest level since January 22.  Oil and gas engineering firm Technip led the index, rallying over 6 percent on news that the company may win orders to build new natural-gas storage sites in Germany.  Closing just behind Technip was Vallourec, the world’s second largest maker of steel tubes for energy production, which benefited from a 3 percent rise in oil prices.

DAX                                 5709.66                    +55.18                  +0.98%
German stocks continued their move higher as Industrials and Consumer Services rallied over 1.6 percent each.  German investors enjoyed a second day of gains to begin the new month of trading, much needed after a rough January in which the DAX fell nearly 6 percent.  Industrials were led by a 2.6 percent gain for Deutsche Post, its biggest gain since January 4, and ThyssenKrupp, which added 1.8 percent after being raised to a “buy” at Bankhaus Metzler.  The German index has looked strong in recent trading, but ECB member Axel Weber said today that the country’s economic recovery will likely not accelerate until next year.

IBEX 35                       10995.20                   +47.50                 +0.43%
For a second consecutive day, trading in Spain led to the smallest gain of the major European indices as the IBEX attempts to regain some of its 3 percent loss from last week.  The leading sectors today were Energy, Basic Materials, and Financials.  Oil prices surged through $77 a barrel today on the NYMEX and helped boost Spanish oil & gas producers as well as alternative energy firms.  Energy leader Gamesa rallied 3 percent after Wind Energy America completed the commissioning of two Gamesa wind turbines in Iowa.  Financial shares rallied over 1.8 percent today led by a 2 percent gain in the country’s largest financial institutions- Banco Santander and BBVA.

FTSE MIB                     22012.00                  +115.71                 +0.53%
The Italian benchmark index gained 0.5 percent in the second day of February trading.  The most active stocks traded in Milan today included financial firms Mediobanca, which gained nearly 6 percent on a potential merger with Assicurazioni Generali, and Banco Popolare, which gained 5 percent.  Telecom Italia added approximately 6 percent on a report that Italy’s government would support a merger between the company and Telefonica.

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

European Equities

European Equities Rally for Second Day on Manufacturing Data

Europe Session Key Developments

•    European Countries, U.S. Post Better-Than-Expected Manufacturing Numbers
•    Commodities Halt Week-Long Skid, Rally On Economic Data
•    Euro Gains Against Greenback, British Pound Lower for Third Day

Better-than-expected manufacturing data from the biggest Euro-Zone nations as well as the United States helped push European stocks higher on the first day of February trading.  Investors are hopeful that the new month will usher in better trading conditions than January, a month in which the DJ Euro Stoxx 600 Index fell over 2 percent.  Today, European stocks moved higher in the early going after Italy, France, Germany, and the U.K. posted better than expected PMI manufacturing data for January.  Manufacturing also expanded in the broader Euro-Zone during the month, as the index rose from 51.6 to 52.4, its highest reading in two years.  After pricing in the data, stocks found new legs in the latter-half of the trading day after the Institute for Supply Management’s factory index showed U.S. manufacturing expanded from 55.9 to 58.4 in January.  This was the fastest pace of U.S. manufacturing expansion in six years and helped European stocks surge into the closing bell.  On the commodities front, the positive data helped push crude oil prices higher for the first time in a week, as well as gold and silver futures which rallied 2 percent and 3 percent respectively.  Going forward, more positive economic and earnings news should drive stocks higher, but uncertainty over government regulation and central bank policy dampen the outlook.

FTSE 100                      5247.41                   +58.89                    +1.14%
British stocks rallied for a second consecutive day led by strength in Basic Materials and Financials.  The basic materials sector gained 2.5 percent thanks to a report today that showed U.K. manufacturing activity increased in January at the fastest pace in fifteen years.  Mining and natural resources firms Rio Tinto and Anglo American helped lead basic materials higher, each gaining over 2.5 percent on the day.  Royal Bank of Scotland Group led bank stocks today after the stock rallied 7.9 percent.  Several companies have expressed an interest in the RBS global card-payment processing unit, including Blackstone Group, the world’s largest private equity firm.

CAC 40                           3762.01                   +22.55                    +0.60%
Trading in Paris resulted in a 0.6 percent gain as Basic Materials and Technology stocks rose 2.1 percent and 1.8 percent respectively.  ArcelorMittal, the world’s largest steel company, gained over 2 percent to lead the Basic Materials sector.  The steel manufacturer was aided by rising commodity prices as well as its acquisition of a 29% stake in Uttam Galva Steels today.  French technology stocks were led higher by Alcatel-Lucent and chipmaker STMicroelectronics, which gained 2.2 percent and 1.7 percent respectively.

DAX                                 5654.48                    +45.69                  +0.81%
German stocks rallied for a second day as each of the nine DAX sectors increased on the session.  In fact, twenty-five of the thirty DAX stocks posted gains today, with only three stocks closing in the red.  Chipmaker Infineon led the index with a 4.7 percent gain after Citigroup increased its share price-estimate on the stock.  Volkswagen was the next biggest gainer on the index, adding 3.5 percent to shares.  The company was honored today by Ward’s Automotive Group, which named Volkwagen’s Clean Diesel engine one of the “10 Best Engines” for 2010.  Commerzbank, Germany’s second largest bank behind Deutsche Bank, rallied over 3.3 percent to lead Financial shares to a 1.2 percent gain.

IBEX 35                       10995.20                   +47.50                 +0.43%
Trading in Spain led to the smallest gain of the major European indices, as the IBEX attempts to regain some of its 3 percent loss from last week.  The leading sectors today were Basic Materials, Consumer Services, and Industrials, which each added over 1 percent during the session.  Tecnicas Reunidas led the index with a 6.1 percent gain after Cheuvreux hiked its target by 10 percent.  The oil engineering firm was also boosted by crude oil prices, which traded towards $75 a barrel.  Ferrovial Agroman added 5.2 percent after announcing that the firm will construct a new dual carriageway in Northern Ireland.

FTSE MIB                     22012.00                  +115.71                 +0.53%
The Italian benchmark index opened the second trading month of the year higher by 0.5 percent.  The most active stocks traded in Milan today included Gemina, which added 1.6% thanks to an upgrade at Cheuvreux, and Banco Popolare, which rose 4.1 percent after it resumed paying its dividend.  TerniEnergia surged 13 percent today after announcing it began work on at least ten new solar projects.

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

European Equities

European Equities Close Higher, Trim First Monthly Loss Since October

Europe Session Key Developments

•    Euro-Zone Unemployment Rises to Ten Percent, U.S. GDP Beats Expectations
•    Commodities Slide, Dollar Continues to Gain Against European Counterparts

European stocks posted their biggest collective gains since December 21 after Euro-Zone unemployment rose less than expected and the U.S. economy posted its largest quarterly gain in six years.  The positive data helped revive risk appetite for investors and pushed European shares higher, trimming their first monthly loss since October.  The biggest driver of market sentiment during Europe’s afternoon trading hours was the U.S. GDP reading, which showed a 5.7 percent expansion for the world’s largest economy in the fourth quarter.  The data showed an improvement in the U.S. manufacturing sector and a 2 percent rise in consumer spending.  The GDP figure also pushed the U.S. Dollar higher against its European counterparts as the U.S. Dollar Index rose for a fourth consecutive day.  The Euro continued its bearish trend as concerns over Greece’s debt problems weighed on the regional currency.  Looking ahead, a plethora of economic data will likely drive markets and price action next week including the release of Euro-Zone PMI data on Monday and German retail sales on Tuesday.

FTSE 100                      5188.52                   +42.78                    +0.83%
British stocks rallied in the final day of trading this week after strong fourth-quarter GDP data from the U.S. and a rise in U.K. housing prices in January.  Three stocks gained for each that fell today on the FTSE Index, which was led by 1.4 percent gains in technology and financial stocks.  Bank stocks were led by HSBC, which added 2.6 percent, and Barclays, which gained just over 2 percent on the day.

CAC 40                           3739.46                   +50.67                    +1.37%
Trading in Paris today resulted in over a 1 percent gain, led by Industrials and Basic Materials which added over 2 percent each on the trading day.  The Industrials sector was led by a 4 percent gain in Saint Gobain and a 3.4 percent gain in Vallourec, the world’s second largest maker of steel tubes for oil and gas production.  Basic Materials stocks were led by a 2 percent gain in Air Liquide after the gas producer won authorization to market its products to health providers.

DAX                                 5608.79                     +68.46                  +1.24%
German stocks gained over 1 percent today as nine of the ten DAX sectors closed higher on the day.  The index was led by Consumer Goods and Technology shares which each rallied at least 2.8 percent each.  BMW led automakers higher after announcing that it expects to increase 2010 vehicle sales in the U.S., China, and Germany.  Daimler gained over 3 percent today after HSBC Holdings raised the stock to “neutral.”  Looking ahead, there will be a number of economic indicators released for Germany including retail sales on Tuesday and PMI services on Wednesday.

IBEX 35                       10947.70                   +118.40                 +1.09%
After posting the biggest loss among Europe’s major indexes in the last two days, the IBEX added just over 1 percent during today’s session.  The index was led by a 1.9 percent gain in financial shares and a 1.8 percent rise in oil & gas companies.  Gamesa was the biggest winner on the day, adding over 3.3 percent during the session.

FTSE MIB                     21896.29                  +293.16                 +1.36%
The Italian benchmark index rallied over 1 percent today despite an unexpected rise in the nation’s unemployment rate to 8.5 percent.  Stocks in Milan snapped their two-day losing streak and trimmed their weekly loss to 3 percent.

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

European Equities

European Equities’ Precipitous Stumble Erases 2010 Gains

Europe Session Key Developments

•    German and Euro-zone PMI Manufacturing Beats Expectations, Hints of Inflationary Pressures
•    U.K. Money Supply Expands at Slower Rate than Anticipated
•    Commodities Fall on Weaker Demand, Stronger Dollar

European markets continued their fall on Thursday, dropping the second consecutive day to erase this year’s advance. Early in the session, bearish appetite flourished following the Chinese Gross Domestic Product data, which showed 10.7 percent growth for the emerging market. Speculation arose that the output expansion, which exceeded analysts’ expectations, will trigger further interest rate tightening down the road. U.K M4 Money Supply data showed an expansion but less-than-expected, which fueled a Dollar and Euro rally against the Pound. Additionally, U.S. jobless-benefits claims, coupled with speculation, which held to accurate, on President Obama’s plan to reign in risk-taking by banks fueled bearish sentiment worldwide. Following the speech by President Obama, which occurred after the European session closed and suggested that banks would be strictly prohibited from running proprietary trading operations or investing in hedge funds and private equity funds, European market equity futures tumbled anywhere between one and three percent each.

Looking ahead, light economic data is expected to end the week. Midway through the session, investors will be looking at French Business Confidence for January (expected 90.0), as well as British Retail Sales data for December (expected 1.1 percent increase from November, expected 3.0 percent increase from December 2008).

FTSE 100                      5335.10                   -85.70               -1.58%
British stocks fell for the second consecutive day, dropping just over one and one-half percent to erase this year’s gains. Basic Materials and Financials fell the most, down 4.31 percent and 2.72 percent each, after data later in the session showed that American jobless claims increased, a sign that the U.S. unemployment situation may be worsening. With investors speculating on weak consumer demand for the next few months, eight of ten sectors fell on the FTSE, with five sectors posting losses greater than one percent. Anglo American and Kazakhmys, both mining companies, led shares lower amid doubt that high demand for commodities will continue. RBS, Lloyds Banking Group, and Barclays lost more than five percent each ahead of President Obama’s speech on bank regulation. Among the gainers on the day were airline companies EasyJet and British Airways, which posted 5.2 percent and 3.6 percent gains, respectively, amid data beating internal forecasts.

CAC 40                     3862.16                   -66.79                 -1.70%
Trading in Paris netted losses across all sectors, dragging the CAC below 3900 points. The 1.70 percent contraction, led by Basic Materials and Financials, marked the second time this week the index has fallen. Seven of ten sectors lost more than one percent, while four sectors lost more than two percent. Overall, ninety-five percent of all equity securities traded on the French index posted losses on the day. Societe Generale followed banking shares around the world down, ending the day in the red by 4.7 percent. Eiffage, France’s third largest construction company dropped 4 percent after its shares were downgraded to “neutral” at Exane BNP Paribas. Other movers on Thursday included ModeLabs, a French mobile-phone maker, which dropped 11 percent, and Icade, after Societe Generale cut its recommendation on the stocks from “hold” to “sell.”

DAX                         5746.97                    -104.56             -1.79%
German stocks posted the second largest decline across Western Europe on Thursday, down over one hundred points to 5746.97. Basic Materials dropped nearly three percent, while Financials, Technology, Industrials, and Consumer Goods fell by 1.71 percent, 1.90 percent, 1.92 percent, and 1.99 percent, respectively. Financials pushed lower later in the session amid American banking regulation concerns, with Commerzbank leading the losses at 3.8 percent. Deutsche Bank skid 2.5 percent, while Siemens fell 1.7 percent. Overall, all nine sectors posted losses on the day, pushing the DAX down 3.53 percent overall in the new year.

IBEX 35                     11444.00                   -265.00                 -2.26%
Spanish stocks fell the most among the five major European equity markets, down over two and one-quarter percent, a 265 point loss. As the IBEX now sits at 11444.00, it has lost 4.15 percent on the year and sits at its lowest level since November 4. Nine of ten sectors dropped on Thursday, with Consumer Goods posting a meager gain of 0.14 percent. Technology, Basic Materials, and Financials all dropped more than three percent, while seven of ten sectors lost more than one percent overall. The losses mark the second consecutive day of bearish movement for the index. Banco Santander fell the most since May, contracting 4.2 percent. Cementos Portland Valderribas, a unit of the Spanish builder Fomento de Construcciones & Contratas, dropped 2.2 percent, for its fourth loss in five days. Other movers included Gamesa Corporacion Tecnologica, which slumped 3.3 percent after its shares were cut to “hold” from “buy’ at Societe Generale.

S&P/MIB                        22876.46                     -249.56                 -1.08%

Notable Europe Event Risk / Economic Releases

Written by Christopher Vecchio, CFDTrading Research
Please send any comments about this report to Cvecchio@fxcm.com

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