Reversals

Daily Commodities Fundamentals: Broader Commodity Market Retreats Amid CFTC Speculation and Falling Risk Appetite

North American Commodity Update, Last Updated 7/28/2009 4:00 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Fall As CFTC Hearings Begin

Crude Oil (WTI)   $67.230                         -$1.080                             -1.58%
Crude Oil future prices dropped significantly today, falling nearly 2.5% during intraday before paring some of its losses. Crude prices started off the day slightly higher only to begin a steady descent following the US Consumer Confidence report, which revealed worse-than-expected results (46.6 actual vs. 49.0 expected). Continued unemployment increases seem to be the primary reason for the disappointing confidence figure; just last week, Fed Chairman Bernanke said that the unemployment rate could increase for a few more years. European equity indices fell lower today, while the US indices appear to be following suit. Poor earnings from both Office Depot and US Steel Corporation discouraged investors even after the S&P Case Shiller Index improved for the first month in three years. However, while all of the above was market moving, the most influential price driver in the broader commodity market today was the beginning of the CFTC hearings regarding speculation restriction. Commodities fell across the board as investors fear that CFTC Chairman will attempt to impose strict position limits in energy markets. The results of the hearings will likely weigh heavily on Crude future prices.

Upcoming Department of Energy Inventories

Commodities – Metals

Precious Metals Decline Near 2% on CFTCSpeculation and Dollar Strength

Gold                   $939.600                           -$16.700                           -1.75%
Gold future prices retreated back below the psychological $950-per-ounce level today as part of a broad commodity pullback today. Investors are selling out of Gold and taking a “wait and see” approach as the CFTC hearings push forward. The results of the CFTC meetings this week will likely be the main driver behind Gold future prices in addition to risk appetite/aversion. The US dollar outperformed the Euro, Pound, and Franc today, but lost to the ultra-safe Japanese Yen and impressive Australian dollar. Recall that Gold and the greenback tend to trade inversely as investors use the metal to hedge against dollar weakness/inflation. Tomorrow’s German CPI report will likely be a market mover for Gold future prices.

Silver                 $13.725                    -$0.265                          -1.89%
After breaking above the $14-per-ounce level yesterday, Silver followed the other commodities downward today, losing approximately 2% during intraday trading. Like Gold, tomorrow’s CPI report will move Silver future prices; however, the US Durable Goods Orders figure will serve as a leading indicator for future industrial production. Because durable goods are expected to last more than three years, an increase in orders will signal heightened optimism in the marketplace and potential growth. Tomorrow should be an interesting day for Silver, as the fundamental data reports will be measured against any news emerging from the CFTC hearings.

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

Reversals

Daily Commodities Fundamentals: Crude Soars, Gold Slips, Silver Slightly Up

North American Commodity Update, Last Updated 7/23/2009 3:54 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Push Forward, Testing $69 During Intraday

Crude Oil (WTI)   $67.180                         +$1.780                             +2.72%
Crude Oil future prices saw significant gains today after encouraging fundamental economic data and corporate earnings were released. Crude reached levels near $69-per-barrel during intraday trading before retracing slightly back near $67, still over a 2.5% gain during the session. US Existing Home Sales, which exceeded expectations by 50,000, proved to be a significant market-mover for Crude prices. Less than an hour later, the Bank of Canada’s Monetary Policy Report provided extremely bullish sentiment in the market, stating that the recession would end this quarter.  The report came in conjunction with additional corporate earnings that exceed analyst expectations, led by AT&T and Ford. Equities all pushed higher as a result, with the Dow surpassing the psychological 9000 level for the first time since January. If Crude can hold strong through tomorrow’s session, it will have added over 10% since 7/10.

Upcoming Department of Energy Inventories

Commodities – Metals

Gold Stuck Near $950, Silver Gains Modestly

Gold                   $950.500                           -$2.800                           -0.29%
Gold future prices did not perform as well as expected today, trading generally sideways yet again. During today’s session, Gold hit a 6-week high immediately following the surprising fundamental data releases. However, the metal could not hold onto its gains, falling from near $957-per-ounce back to around $952, marking a slight decline on the day. For weeks, Gold has been trading inversely with US dollar strength as investors waver between risk aversion and risk appetite. The reason for Gold’s standstill is two-fold; the US dollar was mixed across the board today, beating safe-haven currencies like the Yen and the Franc but losing badly to the Canadian dollar. Additionally, recent inflationary reports have signaled that price growth has been controlled; Gold usually thrives upon inflation concern, as investors use the metal to hedge.

Silver                 $13.770                    +$0.070                          +0.51%
Silver future prices continued to pass higher today, adding another modest gain to what’s becoming an impressive run for the metal. Dollar weakness was not the driving force behind Silver’s gain today; rather, the prospect of a global economic recovery led to a bid up of the dually useful metal. As mentioned yesterday, the UK Retail Sales figure had potential to be market moving today. The release was just one of numerous fundamental data reports that contributed to Silver’s gain today, as US Existing Home Sales and the Bank of Canada’s Monetary Policy also propped up Silver future prices. Tomorrow could end another successful week for Silver; since 7/10, Silver has added nearly 9%.

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

Reversals

Daily Commodities Fundamentals:Crude Slips But Metals Stand Strong

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

Commodities – Energy

Crude Prices Retrace Slightly, Avoid Serious Decline

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

Upcoming Department of Energy Inventories

Commodities – Metals

Precious Metals Manage Gains

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

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

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

Reversals

Daily Commodities Fundamentals: Commodities Trade Lower On Dissapointing Economic Releases

Commodities – Energy

Crude Prices Fall As Data Suggests Continued Global Contraction
Crude prices declined for the day as economic releases from the US and Europe pointed to further economic contraction. US Consumer confidence fell to 49.3, significantly lower than the expected 55.3, underscoring the difficult condition of the labor market. Spending will remain weak as consumers worry about job prospects. In turn this will weigh in on overall economic activity and reduce crude demand.  With crude supplies remaining at very high levels, this should provide significant downward pressures on prices. On the other hand, most of these selling pressures will be offset by dollar weakness as crude is a dollar-denominated asset. Since US government deficits remain at record levels and will likely remain so for some time, the US dollar will likely remain at lower parity to its major pairs for some time. So long as this continues, the push and pull between these factors will likely keep crude prices ranging between major resistance levels of $65 and $73 with higher levels of volatility for the near-term.

Crude Oil (WTI)   $70.070                              -$1.400                             -1.99%

Commodities – Metals

Safe-haven Metals Decline As Dollar Gains, Fundamentals Still Point To Gains?

Gold                   $927.450                           -$13.200                           -1.40%
Gold prices finished the session modestly lower as the US dollar gained against its majors. Fundamentals indeed stand in favor of further gains for the near to medium term but the metal will likely remain rangebound until a more solid view of economic direction is established. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. The US dollar will also remain subdued against its major counter-parts for some time and boost prices. Expect gains for the near to medium term.

Silver                 $13.5800                   -$0.3950                           -2.83%
Silver futures were declined for the day on the negative economic data. Prices will rise if safe-haven metals gain, but due to its industrial applications, economic weakness will mute gains somewhat. On the other hand, if signs of recovery are released, silver will gain at a much faster rate than gold for the same reason. Expect modest gains for the near-term.

-Written by Stefan Tifigiu and Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com, Jsteinberg@fxcm.com

Reversals

Daily Commodities Fundamentals: Crude Continues To Range, Safe-Havens May Be Poised For Further Gains

Commodities – Energy

Crude Prices Fall Despite Large Stockpile Decline And Positive Durable Goods Data

Crude Oil (WTI)   $69.340                              -$0.890                             -1.27%
Crude prices remain fell for the session as savings gains hint that consumer spending will ikely diminish in the coming months. Fundamental influences exist that can both support and deflate current prices. Stockpiles will remain high as lower crude demand couples with continued production from OPEC countries. However, the prospect of lower spending will come as a double edged sword since on the one hand, lower demand should keep prices lower, while on the other lower spending will likely lead to further economic weakness and force the government to maintain deficits at record levels for some time. This will continue to weigh in on dollar pricing and effectively buoy prices somewhat for the medium term. Add to this political tensions that will disrupt (albeit minimally) supply from various countries and you will continue to have support for higher crude prices. While supply disruptions would have a minimal impact on the already large crude stockpiles, the disruptions will still have an effect on prices. In turn, the push and pull between these factors will likely keep crude prices ranging between major resistance levels of $65 and $73 with higher levels of volatility for the near-term.

Commodities – Metals

Safe-haven Metals Gain Despite Dollar Gains, Sign Of Turnaround In Sentiment?

Gold                   $940.200                           +$0.700                           +0.07%
Gold prices finished the session modestly higher despite dollar declines. The lack of movement may come as Gold prices approach resistance levels that have been hit over four times in the past month and have only been broken through once.  Fundamentals indeed stand in favor of further continued gains for the near to medium term. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. The US dollar will also remain subdued against its major counter-parts for some time and boost prices. Expect gains for the near to medium term.

Silver                 $14.1050                         +$0.0730                          +0.52%
Silver futures were flat for the day despite the positive data. Prices will rise if safe-haven metals gain, but due to its industrial applications, economic weakness will mute gains somewhat. On the other hand, if further signs recovery are released, silver will gain at a much faster rate than gold for the same reason. Expect modest gains for the near-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

Reversals

Daily Commodities Fundamentals: Crude Prices Slip Despite Data In Favor Of Gains, Metals May Be Poised For Further Gains

Commodities – Energy

Crude Prices Fall Despite Large Stockpile Decline And Positive Durable Goods Data

Crude Oil (WTI)   $68.540                              -$0.700                             -1.01%
Crude prices remain inversely correlated to dollar gains with crude declining despite a sharp drop in stockpiles and positive Durable Goods data. Nevertheless while data was in favor of higher prices, numerous fundamental reasons continue to point to lower crude prices. Downward pressure comes from stockpiles near decade highs, lower crude demand, and maintained production levels by OPEC. On the other hand, dollar weakness, a resurgence in growth in some parts of the world, and political turmoil in major oil producer countries will provide some steam to buoy prices. Dollar declines are the largest provider of support to prices at current levels. While the dollar has continues to osscilate between losses and gains, the overall trend will likely remain at lower levels for some time. This comes as the effect of record government deficits will weigh in on the dollar. Given weakness in the economy, debts will be difficult to unwind without damaging a recovery. Meanwhile mounting violence and protests in countries like Iran threaten to disrupt supply chains. While these disruptions would more than likely be offset by the large amount of stockpiles on hand, turmoil will still likely be priced in and excacerbated by dollar declines. In turn, the push and pull between these factors will likely keep crude prices ranging between major resistance levels of $65 and $73 with higher levels of volatility for the near-term.

Commodities – Metals

Safe-haven Metals Gain Despite Dollar Gains, Sign Of Turnaround In Sentiment?

Gold                   $932.100                           +$7.800                           +0.85%
Gold prices gained modestly for the session despite dollar gains. This could be a sign of that steady losses in past sessions may have subsided.  Fundamentals indeed stand in favor of further gains for the near to medium term. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. Meanwhile record deficits juggled during a continued recession will likely keep the US dollar subdued against its counter-parts for some time and provide for higher prices. Expect gains for the near to medium term.

Silver                 $13.8950                   +$0.0190                          +0.14%
Silver futures were flat for the day despite the positive data. Price gains will likely slow if expectations for further economic contraction comes to fruition, but the lack of movement in prices today may be a sign that markets are unconvinced of the possibilities of a near-term recovery. Nevertheless, the metal has rallied considerably since the start of 2009 largely on expectations for such a recovery. If delayed, the metal could lose some of those gains. All the same, if safe-havens gain, this will still boost prices albeit more moderately. Expect modest gains for the near-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

Reversals

Commodities Daily Fundamentals: Commmodities Rebound On Dollar Weakness

Commodities – Energy

Crude Prices Fall As Expectations For Lower Demand Weighs On Prices

Crude Oil (WTI)        $69.210                              +$1.710                           +2.53%
Crude prices rebounded as the dollar sold off sharply for the day, While there are numerous fundamental reasons for crude prices to continue to decline, countervailing factors that will offset such these pressures. Downward pressure will come from stockpiles near decade highs, lower crude demand, and OPEC countries. On the other hand, dollar weakness, a resurgence in growth in some parts of the world, and political turmoil in major oil producer countries will push up prices. Dollar declines are the largest provider of support for prices at current levels. While the dollar has rebounded a few times in past few sessions, it will likely remain at lower parity to its counterparts for some time. Record government deficits that many point to as primary reason for the selloffs will be very difficult to unwind without adverse effects on an already weakened economy. Meanwhile mounting violence and protests in countries like Iran threaten to disrupt supply chains. While these disruptions would more than likely be offset by the large amount of stockpiles on hand, turmoil will still push crude prices slightly higher. In turn, the push and pull between these factors will likely drive crude prices to range between major resistance levels of $65 and $73 a barrel for the near-term.

Commodities – Metals

Safe-haven Metals Continue Declines On Dollar Strength, Muted Inflation

Gold                   $926.800                           +$5.800                           +0.63%
Gold prices gained modestly for the session as the US dollar fell against its majors. While gold prices have fallen substantially for the past few weeks, fundamentals continue to point to gains. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. Meanwhile record deficits juggled during a continued recession will likely keep the US dollar subdued against its counter-parts for some time. Both of these factors stand in favor of higher gold prices. Expect gains for the near to medium term.

Silver                 $13.8800                          +$0.1270                          +0.92%
Silver prices followed suit with gold. Prices gains will likely slow if expectations for further economic contraction comes to fruition. The metal has rallied considerably since the start of 2009 largely on expectations for a recovery and if that recovery is delayed the metal could lose some of those gains. Nevertheless, safe-haven gains will still boost prices somewhat. Expect modest gains for the near-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

Reversals

European Daily Fundamentals: Markets Flat After Sentiment From US Session Weighs On Equities

Europe Session Key Developments

• European Shares Decline Toward End Of Session Despite Modestly Better PMI Release
• Prospect For Near-term Recovery Remains Dim In US And Other Trading Partners
• ECB officials Reiterate Expectations for Weakness to Continue Well Into 2010

European shares reversed gains in late trading as negative sentiment from the US pulled spilled into the markets. While equities gained initially due to a slightly more positive Euro-zone Purchasing Managers Index, they were unable to withstand the general trend of sentiment. While slightly better, the data was little evidence of a near-term recovery. In fact, there is evidence of risks that could lead to further contraction. Financials for example remain exposed to a plethora of securities that present greater probability of losses during an extended recession. While credit spreads have improved somewhat, If losses balloon again they will deteriorate again and cut off the lifeblood for recovering businesses. Meanwhile employment issues vary wildly for country to country in the Euro-zone as some countries have heavily regulated labor markets. What this could mean is that jobs already lost are likely the ones with least protection. On the other hand, jobs with greater protection will keep wages high and make it harder for employers to expand positions in larger numbers. As new job creation lags, this will weigh on consumer spending and place further pressure on the European economy. Meanwhile, export demand will continue to decline as major trade partners continue to struggle with their own recessions. So far, evidence lays more in favor of extended weakness to last well into 2010. Equities are more and more exhibiting signs of returning to bearish sentiment. Given conditions, equities will likely decline for the medium-term.

FTSE 100                       4230.02        -4.03        -0.10%
UK Equities closed lower for the day with weakness in a number of sectors. Financials declined 1.09% as investors worries resurface on earning potential for the second quarter. Given continued global contraction, UK banks may be exposed to further losses, both domestically and internationally. The outlook for this sector remains weak. Utilities and Basic Materials also declined 0.76% and 0.43% respectively impacted by revised expectations for lower demand for energy and materials use. Since the index is up considerably in the quarter compared to the other indexes, it may be due for a sharper pullback if bearish sentiment indeed takes hold.

CAC40                          3116.82        -6.43        -0.21%
The French index declined as well with technology and financial stocks selling off the most, falling 1.67%, and 1.47% respectively. Consumer Services gained 1.24% and offset some of the declines. Technology is typically one of the hardest hit sectors during a downturn as consumers fear losing their jobs and curtail spending. Weakness in this sector will likely continue if contraction in the economy extends into 2010. French financials are likely to continue to decline as their interconnected nature with other countries combined with domestic exposures will weigh in on earnings.

DAX                        4707.15        +13.75        +0.29%
The German index was one of two to gain modestly for the day. Consumer Goods gained 2.16%and Utilities gained 1.48%, offsetting declines in the Industrials and Technology sectors, which declined nearly 1.0%. The rebound in consumer goods is likely to be temporary. A rising Euro will boost domestic demand but demand for exports will likely decline for the same reason. Meanwhile, the German IFO institute expects contraction to continue for the economy. Since a large portion of the economy is centered around producing exports, this does not bode well for most of the gaining sectors of the day. German financials are heavily exposed to international exposures, especially in Eastern Europe. Given the extended nature of global contraction, this could weigh heavily on results for the quarter.

IBEX35                        9348.70        +10.20        +0.11%
The Spanish Index was the second to gain modestly for the day. Weakness was seen in most sectors including basic materials, financials and consumer services, which declined 1.06%, 1.04%, and 0.57% respectively. These declines fall in line with expectations for further contraction but gains of 1.83% in Utilities and 1.07% in telecoms buoyed the index. Since Telefonica makes up such a large portion of the economy, eyes will be on how the firm performs in the coming months as a sign of an increase in consumer activity. Given Spain’s rigid labor market rules however, lost jobs may rebuild slowly and hamper spending on such goods and services.

FTSE MIB                       18464.06        -77.24        -0.42%
The Italian Index declined the most of the indexes, pushed down by a sharp 4.57% decline in technology stocks and a 1.77% decline in the Oil&Gas sector. Strength was seen in the Consumer Goods sector however, which helped offset some of the declines. Italy remains one of the more hard-hit members of the Euro-zone following the crisis. Unemployment remains high and wages will likely stagnate for some time. In this regard, gains will likely reverse in the near-term.

-Written by Stefan Tifigiu, CFDTrading Research
Please send any comments about this report to Stifigiu@fxcm.com

Reversals

Commodities Daily Fundamentals: Crude Gains, Safe-Havens Stall On Dollar Rebound

Commodities – Energy

Crude Continues Gains Following News Taken To As Further Sign Of Recovery

Crude Oil (WTI)   $71.260                               +$0.240                                +0.32%
Crude prices gained for the day as markets reacted positively to better than expected economic releases. Continuing Claims, Leading Indicators and the Philadelphia fed all showed better than expected returns. However, upon closer inspection, these releases provide little to justify any major gains in crude prices. Continuing Claims does not account for those who have run out of unemployment benefits and while manufacturing showed a much better result than anticipated, it still points to further contraction. There are a few factors that support higher crude prices however. Among them, the US dollar is likely to remain weaker to other currencies for some time as deficits are beginning to weigh in on the dollar’s appeal as a safe-haven vehicle. In turn, the conditions for extended dollar weakness will likely continue on for some time and as such support crude prices at higher levels. Some also point to political turmoil as a reason for higher prices. Supply shocks from such events could ,but it is doubtful that such disruptions will be large enough to cause spikes in prices. This is because global economic activity will remain subdued and drive crude demand to hang about at very low levels. Supplies remain elevated and with crude production rates being maintained by major suppliers, this should keep stockpiles  high. Supply shocks will have little effect since crude demand will likely remain low since most major economies remain in contraction. In turn, these conflicting factors will likely lead crude prices to range between major resistance levels of $65 and $75 for the medium term.

Commodities – Metals

Safe-haven Metals Decline As Dollar Continues Gains

Gold                   $934.300                           -$1.5000                              -0.16%
Gold prices declined toward the middle of the US session as the US dollar swung sharply from previous declines. Dollar weakness and expectation for greater inflation will likely continue however and stand in favor of gold strength. At the moment, the dollar continues to show indecision in momentum and such oscilations could again lead to safe-haven outflows from the dollar. Gold prices will benefit from this in the near-term, but will also gain on expected inflationary risks. Although presently muted, capital injections are large enough to make inflation a substantial risk once a recovery takes full swing. A number of longer-term investors positioning to hedge against this will likely use gold to do so. As a result, prices can be expected to rise for the medium-term.

Silver                 $14.2200                   -$0.1300                               -0.98%
Silver prices gained as equity markets continued to decline. Gains will likely continue going forward but will be offset if the economy continues to show signs of contraction as silver is used in many industrial applications. However, if expectations turn such that economic activity will improve, silver has the potential to gain at a much faster pace than gold due to both effects of its safe-haven status and its industrial application. Expect modest gains for the near to medium-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com

Reversals

European Daily Fundamentals: European Shares Modestly Positive After US Session Boosts Optimism

Europe Session Key Developments

• European Shares Bounce on US Data and Geithner Comments Toward End Of Session
• European Releases Show Contraction Continues, Financial Sector Remains At Risk
• Fundamental Weakness Will Continue Well Into 2010, Rallies Unlikely To Continue

European shares bounced from modest declines toward the end of the US session as US manufacturing data showed contraction at a less than expected pace. This compounded some of the optimism raised by yesterday’s more positive trade balance and construction output figures. While some say the releases may point to some level of easing in the pace of contraction, continuing claims does not account for those that no longer are eligible for further unemployment claims. As such, these lukewarm releases are far from signs of a full-fledged recovery. In the meantime, the real economy continues to contract and several sectors remain exposed to major risks. Financial institutions for example hold several types of securities tied to such loans as commercial mortgages, student loans, consumer credit, and others. All of which contain greater probability of losses as the recession lingers for such an extended period. For consumers mounting job losses and tightened credit conditions will hamper spending and keep the European economy subdued until well into 2010. Looking forward, there is little evidence pointing to improving conditions that would justify further equity rallies. Given these conditions, equities will likely begin to pull back for the near-term.

FTSE 100                       4280.86        +2.40        +0.06%
UK Equities closed with modest gains as Retail Sales unexpectedly fell 0.6%. Some sectors gained however with Telecoms, Consumer Goods, and Technology sectors leading gains. Vodafone pushed up Telecoms gaining 2.4% as news crossed of possible pledge for stake in the company by Essar. Unilever gained 1.55% as their Net Income rose to $7.53 million. Lloyd’s Banking also gained 3.28% after being raised to neutral by Macquarie.

CAC40                          3194.06        +32.92        +1.04%
The French index gained modestly as Basic Materials sector rose1.83% boosted by Arcelor Mittal’s 2.10% gain following its announcement that its Czech unit would not pay dividends for 2008. Utilities also gained 1.79% as EDF rose 3.09% following announcements by the company that striking employees were “gradually” returning back to work. Financials gained 1.78% as several institutions continued gains after announcements of debt sales.

DAX                        4837.48        +37.50        +0.78%
German rose modestly as well with the Telecom, Financial and Utilities sectors leading the way. Deutsche-Telekom gained 2.89%, boosting the sector following announcement that it would increase its Hellenic Telecom stake by another 5%. Financials also gained 2.76% with Deutsche-Bank RG leading the way with a 3.45% gain following its unveiling of the world’s first “carbon-counter” that would monitor greenhouse gas emissions. The utilities sector also gained 1.49% as E.ON AG jumped 2.31% following its announcement of carbon transfer partnership with Donjiang in China.

IBEX35                        9384.00        +100.80        +1.09%
The Spanish Index gained the second most of the five, led by a 1.67% gain in financials, a 1.24% gain in Telecoms, and a 1.14% gain in Utilities sectors. Banco Santander gained 2.43% despite Swiss Government probes in to its involvement with the Madoff fraud and bad-loan ratios for April month gaining. Telefonica gained 1.24% following announcement of Spinvox winning agreement with the company. A 3.26% gain in Enagas boosted utilities following its announcement that its Balearic Islands Pipe project would be finished by the third quarter.

FTSE MIB                       19233.79        +210.74        +1.11%
The Italian Index gained the most out of the five with Financials, Consumer Services, and Technology sectors leading the way. The three sectors gained 1.80%, 1.71%, and 1.69% respectively. Unicredit Spa gained despite a possibility of downgrades from Moody’s Investors. Mediaset Spa boosted consumer services with a gain of 3.39% following a revision to “buy” by Royal Bank of Scotland. The Technology sector was boosted by a 1.69% gain in STM Microelectronica after winning an “Electron D’Or” award for best power converting product.

-Written by Stefan Tifigiu, CFDTrading Research
Please send any comments about this report to Stifigiu@fxcm.com

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