European Markets

Oil, Gold Threatened as Greece Sinks Risky Assets

Commodities – Energy

Oil Prices Threaten Support as Greek Downgrade Threat Sinks Risky Assets

Crude Oil (WTI)        $79.53       -$0.47       -0.59%
Technical positioning is essentially unchanged from yesterday: prices at the bottom of a rising channel set from the swing low established earlier this month (now at $79.17), with a break lower exposing horizontal support at $77.53 and ultimately the $76 figure. The push lower may be catalyzed as risky aversion makes a comeback in the wake of comments from ratings powerhouse Standard & Poor’s, who said that they may downgrade Greece again by the end of March. This comes on the heels of yesterday’s downgrade of Greece’s four top banks by Moody’s. The issue has also been compounded by comments from Greek Deputy PM Theodoros Pangalos, who told the BBC that Germany has no right to criticize his country after devastating it under the Nazi occupation, adding that the current crop of EU leaders are of “very poor quality” and unfit to manage Europe’s fortunes. Such outbursts will make it all the more difficult for Western Europe to sell a Greek bailout to its electorates, who are already upset with the idea of spending their tax money to finance southern Europe’s spendthrift policies, making the likelihood that the troubled region is left to its own devices significantly more likely. The prospect of a sovereign default with the Euro Zone has sent investors fleeing out of risky assets, with stocks broadly lower in Asia as well as opening in the red in Europe. US equity index futures are likewise in the red, hinting that oil may mount a push lower considering the near-term percent change correlation between crude and the MSCI World Stock Index stands at a firm 0.91. January’s US Durable Goods Orders and weekly Jobless Claims figures headline the economic calendar.

Commodities – Metals

Gold, Silver to Extend Losses as Risky Aversion Gains Momentum

Gold       $1091.90       -$5.85        -0.53%
Prices have taken out range support at $1101.16, with the door now open for a move to resistance-turned-support at the top of a falling channel established from January’s swing high (now at $1073.21). As with oil, the turmoil in Greece promises to encourage further losses as the near-term percent change correlation between the yellow metal and the MSCI World Stock Index remains significant at 0.75.

Silver       $15.75       -$0.22       -1.39%
Technical positioning is unchanged from yesterday: are trading sideways above horizontal support at $15.68, with near-term resistance at the bottom of a previously broken rising channel set from the swing low set earlier this month. The correlation between the cheaper precious metal and the MSCI World Stock Index matches that of its more expensive counterpart at 0.75, suggesting bearish momentum is set to resume. A break past current support exposes considerable downside potential toward the $15.00 figure.

European Markets

European Stocks Correct Higher, Bias Remains Bearish

WEEKLY STRATEGY

FTSE 100

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

DAX

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

CAC 40

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

IBEX 35

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

S&P/MIB

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

European Markets

European Stocks to Extend Decline as Prices Clear Key Support

WEEKLY STRATEGY

FTSE 100

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

DAX

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

CAC 40

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

IBEX 35

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

S&P/MIB

Long-term Technical Outlook

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

Short-Term Technical Outlook

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

European Markets

European Stocks Vulnerable as Prices Approach Resistance

WEEKLY STRATEGY

FTSE 100

Long-term Technical Outlook

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

Short-Term Technical Outlook

The FTSE is approaching a critical upside barrier at 5383.72, the 61.8% Fibonacci retracement of the downswing from the swing high in mid-January, a level reinforced by support-turned-resistance at the bottom of a previously broken rising channel. Relative strength studies area heading into overbought territory, hinting that some manner of pullback may materialize in the near term. Initial support is seen at 5316.79, the 50% Fib.

DAX

Long-term Technical Outlook

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

Short-Term Technical Outlook

German are approaching key resistance at 57400, the top a near-term rising channel and the previous swing top from earlier this month. Negative RSI divergence suggests a move lower is likely from here, targeting the channel bottom at 56012.

CAC 40

Long-term Technical Outlook

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

Short-Term Technical Outlook

The French benchmark index has pushed through resistance at 3764.00, the 76.4% Fibonacci retracement of the decline from February’s swing high, but negative RSI divergence suggests below falling trend line resistance bodes ill for continued bullish momentum. Initial support lines up at 3722.33, the 61.8% Fib.

IBEX 35

Long-term Technical Outlook

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

Short-Term Technical Outlook

The IBEX is approaching resistance at 1071.62, the 61.8% Fibonacci retracement of the down move from early February. Negative RSI divergence argues for a reversal lower at this juncture, with the initial downside barrier at the 50% Fib (1056.63).

S&P/MIB

Long-term Technical Outlook

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

Short-Term Technical Outlook

Italian issues has overcome resistance at the 61.8% Fibonacci retracement of the down move from this month’s swing high (21724.43), but a formidable barrier lines up nearby at the top of a rising channel formation. If bullish momentum persists, the next relevant boundary lines up at 22021.84, the 76.4% Fib retracement. Alternatively, a turn lower sees initial support at the 50% Fib level (21484.05).

European Markets

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 Markets

FTSE Near-Term Positioning Favors The Downside

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

FTSE near-term positioning favors the downside as prices trend lower in a falling channel. Near-term resistance is seen at 5511.66, the channel top, while support is found in the 5440.22-5455.37 congestion region. A below this barrier exposes 5390.58.

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

German shares have trended lower since breaking below rising trend line support, with price action guided by a well-defined falling channel. Prices have come off the bottom of the formation to re-test support-turned-resistance at 59350. Renewed bearish momentum from here will target another test of the channel’s lower boundary, this time at 58452.

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

As with its German counterpart, the CAC has broken below rising trend line support and is being guided lower by a falling channel. A bounce from the channel bottom has stalled below support-turned-resistance at 3979.15, with renewed selling to target 3933.91.

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

Madrid issues are positioned broadly in line with the DAX and CAC: prices have taken out rising trend line support and are trending lower bounded by a falling channel. Near-term support has been found at 1185.46, the 50% Fibonacci retracement level, with an upswing to aim for the 38.2% Fib at 1194.56. Alternatively, a break lower exposes the 61.8% Fib at 1176.35.

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

Italy’s benchmark index seems to be stalling behind its counterparts in Germany, France and Spain. Indeed, while those indexes have broken lower, the FTSE/MIB continues to test rising trend lie support, with the hurdle reinforced by the 23.6% Fibonacci retracement level. Nonetheless, cues from other major exchanges suggest the path of least resistance leads lower, with the next level of relevant support on a breakdown past current levels found at the 38.2% Fib (23040.84).

European Markets

European Equities Collapse for Third Straight Day on Recovery, Banking Concerns

Europe Session Key Developments

•    Financial Sectors Across Europe Under Fire after Obama Commentary
•    British Retail Sales Point Towards Improved Consumption
•    Commodities Continue Slide on Strong Dollar

European stocks retreated to their lowest point in a month following bearish commentary from America, and investment concerns from China. Yesterday, President Obama outlined a plan in which banks would be strictly prohibited from running proprietary trading operations or investing in hedge funds and private equity funds, and today, financial sectors across Western Europe tumbled. Speculation also began to accumulate that China is on the verge of a major rate hike following rapid economic expansion in the fourth quarter, a move to cool inflation and an asset bubble that appears to be forming. Meanwhile, on a day otherwise characterized by light economic data, the Pound traded lower on a strong U.S. Dollar and on Retail Sales for December which, although showed an increased level of consumer spending, also fell short of analysts’ expectations, a sign that credit remains tight for consumers. National benchmark indices fell in all Western European nations, dragging down equity markets to their lowest levels in three months or more.

FTSE 100                      5302.99                   -32.11               -0.60%
Following yesterday’s speech by President Obama calling for limits on risk taking, the British index moved lower on Friday by 32 points, down to 5302.99. The decline capped off the second weekly retreat for the FTSE, which is now down 2.03 percent in 2010. Eight of ten sectors fell, with Financials falling the most, down 1.00 percent. Basic Materials rebounded slightly after a miserable week, up a paltry 0.27 percent. Barclays, ICAP, and London Stock Exchange Group plummeted more than four percent each on Friday in response to President Obama’s regulatory plans. The FTSE remains up 51 percent from last year’s low, though, gains could expected to be trimmed more if central banks tighten stimulus plans too quickly.

CAC 40                     3820.78                   -41.38                 -1.07%
Trading in Paris on Friday resulted in over a one percent drop, dragging the CAC back below 3900 to 3820.78. The drop, which marked the third consecutive decline for the index, helped drag down the index over three percent over the last three days. Eight of ten sectors fell, with Financials and Oil & Gas leading the decline, down 2.58 percent and 1.52 percent, respectively. Air France-KLM Group declined 3.1 percent, following airlines across Europe down, though analysts’ expectations remain high. Credit Agricole slid 2.5 percent, while Societe Generale skid 5.2 percent amid banking regulatory concerns. Gainers on the day included Pierre & Vacances, which jumped 3.4 percent, and Somfy, which added 5.0 percent to its highest level in just fewer than two months.

DAX                         5695.32                    -51.65             -0.90%
German stocks posted their second straight weekly loss, following other European equity markets down amid banking and lending concerns. All nine sectors fell on the German index, with Technology, Consumer Goods, Financials, and Consumer Services, leading the decline, down 1.21 percent, 1.47 percent, 1.66 percent, and 3.60 percent, respectively. As governments around the globe tighten restrictions on the banking industry, Deutsche Bank, Germany’s biggest lender, fell 4.2 percent as Germany announced that they, too, will have plans to ratchet-up regulation sometime in the future. Other losers on the day included Lufthansa, which fell 6.1 percent after Equinet cut its recommendation to “reduce,” while Daimler dropped 1.7 percent after its recommendation was cut to “neutral” from buy at Goldman Sachs.

IBEX 35                     11373.40                   -70.60                 -0.62%
The Spanish index was again deluged with sellers on Friday, as the index dropped 0.62 percent, bringing its total weekly loss to 4.9 percent. The weekly drop was the worst decline the IBEX experienced since March 2009. Nine of ten sectors fell, with Heath Care descending 3.92 percent, the steepest loss on the day. Basic Materials rebounded slight, up 0.31 percent. Banco Popular Espanol skid for a third straight day, down 1.9 percent, as JPMorgan Chase & Co. cut its share-price estimation on Spain’s third-largest bank. Banco Santander fell 1.4 percent, and Bano Bilbao Vizcaya Argentaria slumped 2.3 percent amid the bank regulatory speculation.

S&P/MIB                        22567.81                     -308.65                 -1.35%

Notable Europe Event Risk / Economic Releases

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

European Markets

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

European Markets

European Equities Rebound Ahead of Earnings Week

Europe Session Key Developments

•    British Housing Market Showing Signs of Recovery
•    Italian Trade Balance Suffers
•    Trading Volume Lighter Ahead of Inflation Data

European markets moved higher on Monday on speculation of better-than-expected earnings later this week from banks across the globe, a strong indicator of which direction global financials will move towards over the next few months. Data proved light on the day with markets closed in the United States for the Martin Luther King, Jr. Federal holiday, though bullish sentiment prevailed ahead of data releases later this week. Highlighting the rebound were data from Britain that showed a rebound in price in the housing sector, which has been mired in its worst slump of the past 25 years. Elsewhere, the Euro continued to falter against the Dollar regarding the debt situation in Greece, resulting in finance ministers from 16 European nations to meet to debate whether or not a currency intervention may be necessary. However, given the recovery state of the broader euro area economy, the European Central Bank’s Nowotny was quoted in an interview later in Monday’s session as saying that a currency intervention remains unlikely.

FTSE 100                      5494.39                   +39.02               +0.72%
British stocks advanced on Monday as nine of ten sectors rebounded following the first weekly decline in 2010. Basic Materials and Consumer Goods led the resurgence, up 1.75 percent and 1.27 percent each. Markets were boosted in the premarket as the Rightmove House Prices gauge showed 0.4 percent increase in house prices from December, while up 4.1 percent from January 2009. Despite this, Taylor Wimpey, Britain’s second-largest home builder, fell 2.1 percent on news that it sold fewer homes last year following the worst housing crisis in Britain in 25 years. Tullow Oil gained 2.2 percent after it announced it would move to purchases assets from Heritage Oil. Other winners on the day included Cadbury, which gained 1.8 percent after Kraft Foods said it was considering raising its bid for the chocolate company.

CAC 40                     3977.46                   +23.08                 +0.58%
Trading on the French exchange led to a gain just over 23 points, up 3977.46. Seven of ten sectors gained, with Oil & Gas climbing 1.60 percent. Alcatel-Lucent dropped 1.7 percent after two consecutive days of gains. Following two consecutive days of losses, L’Oreal, the world’s biggest cosmetics maker was raised to “buy” at Deutsche Bank. Other gainers on the day included PPR, up 1.9 percent to its highest level since October, while Zodiac Aerospace jumped 5.4 percent, its first gain in five days.

DAX                         5918.55                    +42.58             +0.72%
German stocks rose the most among the five major European equities, advancing 0.72 percent for its biggest gain in two weeks. As corporate earnings are expected to show improvement given the releases due over the next week, the DAX rebounded after lasts weeks losses, which were the worst losses since October. Ahead of the earnings, six of nine sectors gained, with Basic Materials and Consumer Goods rising the most, up 1.54 percent and 1.35 percent, respectively. Telecommunications was the only sector to drop more than one percent on the day. Continental, the second-largest European auto-parts manufacturer gained 3.2 percent on Monday after it was upgraded to “outperform” at Credit Suisse. BMW, the world’s largest maker of luxury automobiles, gained 1.5 percent, while Daimler rose 1.7 percent.

IBEX 35                     11870.70                   +25.70                 +0.22%
Following choppy trading last week, the Spanish index rose for only the second time in three days, up just under one-quarter of one percent on Monday. Six of ten sectors posted gains, with Technology suffering the most, down 1.03 percent. Consumer Services gained the most, up 0.71 percent during trading hours. Banco Espanol de Credito fell 1 percent as data showed that the number of bad loans in November rose from the same period in the previous year. Grupo Tavex surged 11.0 percent, pushing its total gains for the month to 41 percent. Spain’s biggest airline Iberia lineas Aereas de Espana gained for the fourth consecutive day as it was upgraded to “outperform” at Credit Suisse.

S&P/MIB                        23509.76                     +37.65                 +0.16%

Notable Europe Event Risk / Economic Releases

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

European Markets

European Equities Falter as Recovery Optimism Wanes

Europe Session Key Developments

•    German Price Index Declines, EZ CPI Holds Steady Despite Low Rates
•    Euro area Trade Balance Decreases on Exports
•    Poor Earnings Data Drag Financials

European stock markets declined for the first weekly decline in over a month as a poor U.S. consumer sentiment report, coupled with worse-than-expected revenue data from JPMorgan drove markets negative on Friday. As JPMorgan, the United States first bank to report fourth quarter earnings, announced that it increased its credit-loss provisions, investors hesitated on the notion of a full recovery of the Financial sector, driving down banking institutions across Western Europe. All eighteen national benchmarks in Western Europe declined, except in Iceland, while the DAX dropped by nearly 2.0 percent. As trepidation builds regarding a full-fledged recovery just yet, market sentiment is expected to move on more earnings and a slew of important economic releases early in the week.

FTSE 100                      5455.37                   -42.83               -0.78%
Following a poor start to earnings season, the British market ended the week negative for the first time in the past four, finishing Friday at 5455.37. Eight of ten sectors dropped on the day, with Basic Materials, Telecommunications, Financials, and Healthcare all losing more than one percent each. Man Group, Britain’s largest publicly traded hedge fund, plummeted 6.9 percent after data showed a larger-than-expected drop in assets. Later in the session, news from the United States showed that JPMorgan, the second largest American bank, reported less-than-expected revenue, dragging Financial sectors across Europe down. Other losers on the day include QinetiQ Group, falling 12 percent, a record drop for the company. Overall, the index posted a 1.4 percent drop on the week, though the FTSE remains up 0.78 percent in 2010.

CAC 40                     3954.38                   -61.39                 -1.53%
Following its British counter-part, the French index sank today following dismal outlook from the Financials sector, which dropped over two and one-half percent on Friday. Overall, the CAC tumbled 1.53 percent, with nine of ten sectors appearing in the red on the day. Societe Generale, France’s second-largest bank, and Dexia, the largest lender to local governments in Belgium and France, each dropped 2.7 percent following the JPMorgan data. Amid the sell-off, notable gainers during the session were Carrefour, Cap Gemini, and Atos Origin, adding 3.6 percent, 3.6 percent, and 2.0 percent, respectively.

DAX                         5875.97                    -112.91             -1.89%
The German index fell the most among the five major European equity markets on Friday, declining nearly 2.0 percent to 5875.97. Despite data early in the session that German inflation remains well-within the European Central Bank’s medium-term range even as the ECB holds the key interest rate at 1.00 percent, the DAX tumbled following poor data suggesting consumer spending remains depressed abroad. Nine of ten sectors fell on the day, with Technology dropping 3.44 percent, and Financials and Basic Materials each losing more than 2.0 percent. Deutsche Bank and Commerzbank fell 3.7 percent and 2.5 percent, respectively, following Financials down across the globe. Other movers on the day included Drillisch, which added 2.3 percent, and HeidelbergCement, which fell 2.7 percent after its stock was downgraded to “hold” at ING Groep.

IBEX 35                     11845.00                   -154.80                 -1.29%
Spain’s IBEX index had its largest daily decline in nearly four weeks, dropping 1.3 percent for the day overall. The index is now down 0.80 percent in the new year following its biggest weekly decline in five weeks. Nine of ten sectors dropped on Friday, with five sectors dropping one percent or more, and Health Care posting the only gain on the day. Banco Popular Espanol slid 1.5 percent, while Banco de Sabadell fell 2.2 percent, its biggest decline in a month. Iberia Lineas Aereas de Espana added 1.5 percent, its largest gain since December 7, as crude declined during trading hours.

S&P/MIB                        23472.11                     -333.88                 -1.40%

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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