Forecast and levels for S&P 500 - page 35

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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.
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