Market View; World Stock Indexes; Trading Journal

The beginning of the week was marked by a positive trend registered by most European indices and by various sectors of activity. The utilities and banking sectors lead the gains. Societe Generale rose 0.73%, while Unicredit fell 1.34% on the day the Financial Times said the two institutions are considering a merger. This news was not officially confirmed. On the other hand, Air France KLM was among the best performers, after AccorHotels said that it is analyzing the acquisition of a stake in the airline.

On the macroeconomic front, the PMI economic activity index for the Euro Zone fell to the low of the last 18 months to 54.10, in line with expectations. The same indicator, but relative to the services sector, was 53.80, compared to the expected 53.90.

European markets closed in different directions, though contained. During today’s session, investors’ sentiment was influenced by the political situation in Italy, as well as the comments made by the central banks. Yesterday, just a few “more populist” words from the new Prime Minister Conte in the Senate were enough to cause a rise in Italian yields (especially those with a maturity of two years). Today, this upward movement of Italian sovereign yields remained, which again penalized the banking sector.

In the pre-opening, the European indices rehearsed with some gains. Today will be the scene of the contrast between two factors. On one hand, the good performance of Wall Street, which should benefit the most cyclical sectors in Europe. But on the other hand, investors will have to face a new upward movement in yields but this time has a different nature. Yesterday, the session was driven by a rise in sovereign yields, but unlike in previous days, was not due to the political situation in Italy. Spurring the new upward movement of these interest rates were statements by Peter Praet. The ECB's Chief Economist has stated that this institution is progressively more confident that it will reach its goal of 2% of inflation. These statements indicate that during next week's meeting the topic on the end of the debt acquisition program will certainly be debated.

The day was slightly negative for most European markets, with investors waiting for the G7 meeting this weekend in Canada as well as the European Central Bank meeting next week. In fact sales pressure has focused mainly on the financial, automotive, chemical and commodity sectors. In Germany, the economic data published sparked fears about the state of the country's economy. After yesterday data on orders to industry have disappointed the market, today it was announced that industrial production fell 1% in April compared to the previous month (against a forecast of a slight increase of 0.30%), while exports decreased 0.30%, in line with the estimates. In some German newspapers circulate rumors, not confirmed, that Deutsche Bank is studying a merger with Commerzbank. In this market, Commerzbank fell 1.96% and Deutsche Bank fell 1.22%.

European markets ended the first day of what will be (according to some economists) the most important week of the year. After falling last week, the Italian stock market led the gains, with a valuation of 3.43%. The new Italian Finance Minister has stated in an interview, with Corriere della Sera, that a departure from his country of the Euro is not being studied and that the Government of Rome will combat any deterioration of the economy that could give rise to such a scenario. As a result, the banking sector was among the best performers, with investors waiting for the FED decision scheduled for Wednesday and the ECB meeting scheduled for Thursday.

The meeting between President Trump and North Korean leader Kim Jong Un ended with the signing of a cooperation agreement between the two countries. Details of this understanding have yet to be announced. It is important to remember that the agreement reached today is the first and important step in a process of normalization of relations between the USA and North Korea and of that country with its southern neighbor. It is crucial to understand today's meeting as an integral part of a process that should be long and susceptible to setbacks: 64 years of tensions do not end in a single day.

European markets were trading higher, with the market waiting for the FED (today) and ECB (tomorrow’s agenda) meetings. In sectoral terms, technology companies and raw material producers led the gains, with valuations higher than 1%, while the telecommunications sector led the losses. In retail, Inditex securities reacted with a valuation of around 3% to the publication of its quarterly results: the net result reached 668 M. € vs. 643 M. € forecast. However, sales, a key variable in a retailer, reached 5654 M. € vs. 5820 M. € estimated. Gross margin gains offset lower-than-expected sales. Oil prices rose a day after OPEC said oil prospects in the second half of 2018 were highly uncertain and warned of falling demand.

European markets ended up in a session marked mainly by the meeting of the European Central Bank. Most of the stock market indexes and activity sectors ended up positive. At today’s meeting of the European Central Bank (held in Riga), it was decided that the asset purchase program will remain at the current pace of 30,000 M. € by the end of September 2018. After this time, to data on medium-term inflation outlook, the buying pace will be reduced to € 15 000 M. by the end of December 2018, ending at that time. In addition, the statement said that “the Board of Governors expects the ECB’s key interest rates to remain at current levels at least through the summer of 2019 and in any case how long it will take to ensure that remains in line with current expectations of a sustained adjustment.

European stock markets ended lower, with investors opting for some profit taking after yesterday's gains triggered by the ECB's meeting. Leading the losses were the banks and the producers of raw materials, the latter still reflecting the economic data revealed yesterday by China and the news about the new customs tariffs announced by Trump. On the other hand, other stocks, for more specific reasons, stood out positively. Rolls Royce rose more than 9 percent after announcing a plan to settle the company's accounts, which includes cutting 4600 jobs. In retail, Tesco gained ground, having reported sales for the first quarter in line with forecasts and confirmed its outlook. On the contrary, in Stockholm, H&M retailer titles were under pressure, after the company reported quarterly sales below estimates. On the macroeconomic level, and after the ECB's statement yesterday, Eurostat said today that the inflation rate in the Euro Zone rose from 1.30% in April to 1.90% in May, the highest level since April of the year past.

The first day of the week was negative for the European stock markets, justified by the negative sentiment that Donald Trump's announcement on the imposition of new customs duties against China. The automakers led the losses. Shares of Volkswagen fell 3.63% after news of the arrest of Audi executive director Rupert Stadler. The oil sector was the only sector to end up on the day the oil price mirrored a recovery in international markets. In Frankfurt, Thyssen Krupp depreciated 2.17%. The main shareholders of the German company were against the proposal of the administration to merge its steel production activity with India's Tata Steel.

The escalation of fears and doubts about a possible US-China trade war put pressure on European markets. Remember that the US President threatened to impose a tariff of 10% over 200 000 M.USD on Chinese products, which can later have significant consequences on global production and trade. The producers of raw materials, particularly the mining companies, responded with heavy losses, with the respective sector falling more than 2%. In addition, the oil issue also provided a less comfortable environment for investors. However, the price of oil traded on a downward trajectory, just days before the OPEC meeting.

The European indices began trying to start a technical recovery after two days of selling pressure. Investors will remain vigilant regarding any news, rumor or tweet associated with US trade tensions with its major partners. The attention of investors should be momentarily diverted from issues related to the specter of a trade war and directed towards Sintra. In this Portuguese city, the ECB Annual Forum is taking place and will have its high point today: a roundtable meeting with the Presidents of the ECB, the Fed and the Bank of Japan. Technically, the DAX has an important support zone in the 12550/12600. An initial recovery from this zone can not be ruled out but European markets are vulnerable to a potential shortage.

European markets traded lower, with investors waiting for the OPEC meeting that starts tomorrow. In the international markets, and in face of this event, the price of oil negotiated on a downward trajectory. The banking sector was one of the worst performers of the session.On the positive side was the utility EDF that appreciated, with the speculation that appeared in the market regarding a possible spin-off of the renewable energy and nuclear energy businesses. In the automotive sector, Daimler was penalized for reporting that it reduced its profit estimates for 2018 as a result of current global trade tensions. The Bank of England left the benchmark interest rate unchanged at 0.50%, as predicted by economists, although the number of economists advocating a further increase in interest rates is increasing.

At the macroeconomic level and somewhat surprisingly, the PMI for economic activity (manufacturing and services) improved in June from 54.1 to 54.8.

Trade tensions between the US and China have remained at the center of attention. On Sunday, President Trump sent out a tweet inviting all US trade partners to abandon their protectionist practices under pain of a similar move by the US.

Most European stock exchanges traded slightly lower today, prolonging fears of trade tensions between the US and China. However, raw material producers, one of the most affected sectors recently, have recovered, having led the gains. The automotive sector has presented a contained valuation, after the recent news. Other more specific news also marked the session. British supermarket chain Sainsbury fell by more than 2 percent after industry data showed sales fell in the last three months while other competitors showed higher sales.

European stock exchanges reversed the initial downward trend, because of news about the US. Most of the sectors followed this behavior, with the exception of the banking that was kept pressed. Leading the gains was the energy sector, fueled by news that the United States will have required all countries to fully halt their imports of Iranian oil by November 4 if they want to avoid US sanctions, reinstated after Washington’s withdrawal from the agreement with Tehran. The price of oil rose more than 2% in international markets. In Italy, Saipem rose more than 5%, in Amsterdam Royal Dutch Shell rose 2.48% and in London BP advanced about 3%.
According to Reuters, US officials have said the US government will use an improved security review process to deal with China’s investment threats to acquire US technology instead of imposing specific restrictions.

In the pre-opening, the European indexes rehearsed in descending trajectory, before the return of worries with the global commerce. The US government said yesterday that the Foreign Investment Committee will evaluate US technology or state-of-the-art technology acquisitions by companies with more than 25% Chinese capital. The oil sector will continue to be monitored by investors, after the recent oil price has seen gains in international markets.

Last Friday, european markets traded higher on a day marked by lower than usual liquidity, a trend that marked the week. Some more specific news has boosted their respective sectors, and sentiment is still conditioned by the current trade tensions between the US and its main partners. The Euro appreciated against the Dollar, in view of the agreement reached by the leaders of the European Union on the issue of migration. Producers of raw materials led the gains. Anglo American said it expects results for the first six months of the year to be at least 20% higher than in the same period last year. The mining company rose more than 4%. In terms of economic indicators, Eurostat reported that the inflation rate in the Eurozone increased from 1.90% in May to 2% in June.