|Day's range||12,476.13 - 12,649.98|
|52-week range||8,255.65 - 13,795.24|
With the U.S markets closed, Eurozone and member state service sector PMIs for June and COVID-19 are in focus today.
Futures point to a bullish day ahead. U.S Stats will need to support, however…
There’s plenty to consider as we enter the 3rd quarter. Brexit, a labor market recovery, possible trade wars, and Trump are all there to influence…
(Bloomberg) -- European stocks closed in the green, after swinging between gains and losses in a volatile session ahead of the release of minutes from the Federal Reserve’s latest meeting.The Stoxx Europe 600 Index added 0.2%, erasing a drop of as much as 1% after a private-sector U.S. jobs report. The benchmark fell earlier on downbeat virus news, tensions about China’s national security legislation for Hong Kong and bleak German unemployment data.Germany’s DAX Index dropped 0.4% as trading resumed following an earlier outage on Deutsche Boerse’s T7 system, on which both Xetra cash equity and Eurex derivatives trading rely. The technical issue disrupted derivatives and stock markets in several Central and Eastern European countries and prompted Denmark to postpone a bond auction.The Stoxx 600 is entering July, historically its best month of the year, after racking up three straight months of gains. Following a downbeat first quarter, European stocks rebounded in the second to climb 13%, with technology, autos and mining sectors leading the rally.“We’ve entered a consolidation phase across markets, not just for Europe at the moment, and at some point we will move higher again,” Esty Dwek, head of global market strategy at Natixis Investment Managers Solutions, said by phone. “But because markets have been pricing in a lot of good news already and quite a good shape of the recovery, it might take even more better-than-expected news for markets to keep moving up.”U.S. companies added 2.37 million jobs in June following a revised 3.07 million gain in May that was previously reported as a decline, according to ADP Research Institute data released Wednesday.Travel and leisure shares led gains on Wednesday, followed by energy companies. Carmakers, miners and banks trailed.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It’s a particularly busy day ahead on the economic calendar, which will provide direction. COVID-19 numbers will continue to be a concern, however…
It’s a busy month ahead, with corporate earnings thrown into the mix. COVID-19, geopolitics, and economic data will also continue to drive the majors.
The breakouts did happen and, in both cases, were to the downside, which is rather negative information for stock traders.
It’s a quiet day ahead on the economic calendar, which will leave the European majors in the hands of the news wires and COVID-19 updates.
(Bloomberg) -- European stocks are entering the second half of the year on a strong footing.Even after three straight months of gains, a growing number of strategists and investors are turning bullish on the region’s equities. Helping sentiment are reports pointing to an economic bounce, unprecedented stimulus measures and optimism that easing lockdown measures won’t lead to a second wave of coronavirus infections.That’s building a case for European equities to continue a rare outperformance over peers in the U.S., where infections are on the rise in several states. Both the Stoxx Europe 600 Index and the Euro Stoxx 50 Index have outperformed the S&P 500 benchmark since mid-May, and are on track to beat Wall Street for the first full month since last September, helped in part by a rotation into cyclical and value shares.“I absolutely agree with the growing positive view on European equities,” Chris Dyer, director of global equity at Eaton Vance, said by email. “From a relative valuation perspective, the discount that Europe trades at versus the U.S. has expanded. Regarding how long can Europe outperform the U.S. stock market, the answer is that this could extend for several years.”Even after a rally that has recouped more than half of the pandemic-spurred losses through March, European stocks continue to trade near a record discount on an estimated price-to-book value basis versus their U.S. peers. At the same time, institutional money is returning to the region after missing out on the initial rebound.Strategists at BlackRock Inc., the world’s largest asset manager, are considering upgrading European equities from their current underweight stance, joining market participants at Goldman Sachs Group Inc., Morgan Stanley, Bank of America Corp. and Eaton Vance in turning more optimistic about the region in recent weeks.Positive PMI data trends are validating early investor optimism about an economic recovery, with euro-area figures for June beating forecasts and France even returning to expansion territory. With those priced in, further signs of healing may be needed for markets to move higher. That could come from continued easing of lockdown measures in countries including the U.K., which is set to reopen pubs, restaurants and cinemas in July.Some indicators still point to more scope for gains. Despite the market bounce, sentiment in Europe remains deeply negative, and Barclays Plc strategist Emmanuel Cau notes that overall positioning remains cautious.“Amid elevated tail risks and the looming negative summer seasonality, the lack of widespread investor participation in the rally continues to provide some cushion to equities and could give legs to the rally, in our view,” he wrote in a note Friday.Historically too, Europe is entering prime time. July is the period that the Stoxx 600 has posted its biggest monthly gain on average over the past decade. And it’s chasing up a May advance with one in June for the first time since 2005.Still, there are plenty of headwinds that could mar the rosy picture for Europe. Bluebay Asset Management chief investment officer Mark Dowding worries there’s complacency about the economic trajectory and the spread of the virus, noting scope for further downward revisions to growth forecasts. Beyond that, there are also Brexit negotiations, trade tensions and unified approval for the European Union recovery fund to contend with.Not that such obstacles have stopped bulls so far. Among regional markets, Denmark’s OMX Copenhagen 25 Index has fared the best in the first half of the year. Thanks to a heavy weighting of health-care shares, it’s the only European benchmark to post gains, up 7.1% in the period. Defensive darling, the Swiss Market Index has also outperformed, down 5.4% versus a 14% drop in the Stoxx 600. Germany’s DAX Index is down 8.8%.Sector-wise, defensives are ahead on the year, but they’re losing their advantage. Although tech and health-care shares are the only sectors in green in 2020, cyclicals such as carmakers and miners have led gains since mid-May.Strategists are split on the best industry exposure to have in the coming months, following the strong rotation. Bank of America, Barclays and Morgan Stanley still favor cyclical stocks, while JPMorgan Chase & Co. and Citigroup Inc. recommend defensives.Europe’s recent outperformance against the U.S. also comes amid growing concerns that America’s economic rebound will be stifled by hotspots of fresh coronavirus cases.Read More: Horrifying U.S. Covid Curve Has a Simple Explanation: Max Nisen“The jury is still out whether Europe is going to be a multi-year investment or a trade for this year,” Wei Li, head of investment strategy at BlackRock’s iShares EMEA, said by phone. “The reason for us in warming to European equities is the relative success that Europe has had in controlling the virus’s spread compared to the U.S. and more prudence in opening up.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Perhaps this wasn’t the best week for global indices, but it also wasn’t the worst; especially after the bearish gap at Monday’s opening.
COVID-19 and geopolitics back in focus. As the U.S sees another spike in new COVID-19 cases on Thursday, Trump could spook the markets later…
General market optimism only lasted till today’s morning. Currently we can see a lot of negativity returning to the charts.
A bearish opening for the markets on Monday morning did not spook investors. Instead, traders rushed to buy, supported by lower and more attractive prices.
(Bloomberg Opinion) -- Many of the world’s leading investors are concerned that the recent gains in the U.S. stock market are overdone, given the uncertain economic outlook and the risks of a second wave of the Covid-19 virus. But American equities are in very good company.Investing in U.S. stocks is “simply playing with fire,” Jeremy Grantham, whose firm GMO oversees about $60 billion, told CNBC on Wednesday. Ray Dalio’s Bridgewater Associates warned last week that a decline in U.S. corporate profit margins could lead to a “lost decade” for equity investors. And in a June 18 note, Howard Marks of Oaktree Capital Management LP wrote, “The potential for further gains from things turning out better than expected or valuations continuing to expand doesn’t fully compensate for the risk of decline.” No wonder the world is increasingly talking about bubbles.The 40% rally in the benchmark S&P 500 index, since it reached a low for the year on March 23, is “the fastest in this time ever,” Grantham said, as well as the only one in history “that takes place against a background of undeniable economic problems.” Nobel Prize-winning economist Paul Krugman wrote in the New York Times about what he deemed “market madness in the pandemic.”And yet the gains in the past three months aren’t restricted to U.S. stocks. Instead, they are mirrored in broader equity indexes. Even those that don’t have the benefit of a Microsoft Corp. (which has a 5.74% weighting in the S&P and is up 44% since U.S. stocks bottomed), an Apple Inc. (5.69% weighting, up 57%), an Amazon.com Inc. (4.3% of the index, 40% gain) or a Facebook Inc. (2.19% weight, up 60%) have recovered.The gains in Japanese stocks have matched those of the U.S., driven in large part by companies in sectors including machinery, marine transport and oil and gas — “an awful lot of dull, dirty, cyclical stuff,” as Jonathan Allum, a London-based strategist at SMBC Nikko Securities Inc., put it in a recent research report.Even regional European benchmark indexes, including the U.K. FTSE 100, Germany’s DAX index and France’s CAC 40 index, have staged rallies similar in size to the S&P 500’s. In fact, if you compare the price gains since the S&P reached its nadir for the year, Germany’s market index has even outpaced its U.S. counterpart.All of which suggests that the recent blaming of the U.S. market renaissance on so-called Robinhood Bros — U.S. day traders seeking to replicate the thrill of sports betting by gambling instead on stocks — misses the broader picture. There’s been a widespread comeback in equities across the geographical board. Moreover, it’s not just stocks that have come roaring back. In the debt markets, yields on non-government bonds have dropped precipitously, after spiking higher as the pandemic started to trash the global economy. For companies borrowing in dollars in the fixed-income market, money has never been cheaper, with the yield on the benchmark index covering $6.5 trillion of bonds declining to a record low in recent days, as the Federal Reserve began buying corporate debt as part of its quantitative easing program.Skeptics of the rally in financial assets can point to the real and present danger that a resurgence of virus infections, and further lockdowns, would stymie an economic rebound. There’s also the potential for shockwaves surrounding the forthcoming U.S. election.But more agnostic observers see the markets looking further ahead and weighing the massive intervention of central banks as the prime determinant of the outlook for equities. “While news headlines can make us think the second-wave and election stories are the biggest drivers for markets, it is the Fed story that will endure over the medium term,” Mark Haefele, the chief investment officer at UBS AG’s global wealth management unit, wrote last week.It seems that as long as the world’s central banks are willing to continue their prime-pumping efforts to stop the global economy from falling off a cliff, investors everywhere are happy to maintain their faith in the value of financial assets. Only time will tell whether they’ll be rewarded for their market piety.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The company once hyped as the future of German finance has become a symbol of national embarrassment.After promising to shake up the world of payments, Wirecard AG saw its stock collapse and its chief executive officer resign after 1.9 billion euros ($2.1 billion), or about a quarter of its balance sheet, went missing. It subsequently withdrew its fiscal 2019 and first-quarter 2020 financial results after saying those funds on its balance sheet didn’t exist. That was a bombshell for Germany’s establishment after it defended Wirecard from critical investors who have long warned of accounting irregularities.“We Germans aren’t as prone to euphoria as in the U.S., but back when Wirecard joined the DAX, there was this great feeling that we can also produce successful tech giants,” said Hans-Peter Burghof, a finance professor at the University of Hohenheim in Stuttgart. “What we’re seeing now is just awful.”“It’s embarrassing for Germany,” he said. “The banks, the auditors and the regulators weren’t asking the right questions.”For all its engineering prowess, Germany has lagged in producing technology giants such as Facebook Inc., with the exception of software company SAP SE. After a run of acquisitions, Wirecard seemed set to change that narrative: based in a sleepy suburb of Munich, a city better known as the home of BMW and Siemens, the upstart company bumped then 148-year-old Commerzbank AG out of the DAX, Germany’s benchmark index of publicly-traded companies, in 2018.Wirecard’s origins focused on servicing payments for online gambling and porn. More recent customers include Germany’s most successful soccer club Bayern Munich, French mobile phone carrier Orange SA and Swedish furniture giant Ikea. Investors, analysts and regulators were willing to overlook Wirecard’s opaqueness as long as it kept growing, even as questions about its accounts were highlighted last year by a series of media reports, led originally by the Financial Times.The stock slid and investors placed so many bets that it would tumble further that German financial markets regulator BaFin stepped in to temporarily ban such short positions against Wirecard, a step it had never taken for an individual company.“Our focus was on protecting trust in the market as a whole, not a single company,” a BaFin spokeswoman said in response to questions from Bloomberg. BaFin directly oversees only banks and insurers.Others don’t agree. Investors’ losses would have been “a fraction of what they are” if BaFin had taken a different approach, said Carson Block, the famed short seller. He says his firm Muddy Waters made a bet against Wirecard in 2016, but didn’t renew it.Investors BalkThe stock has fallen 86% since it joined the DAX. Creditors’ faith that they’ll get their money back from Wirecard has also evaporated: by Friday its bonds were offering yields similar to those of bankrupt rental-car giant Hertz Global Holdings Inc.The collapse in the shares risks further undermining the readiness of Germans to invest in stocks rather than savings accounts, which currently offer negligible interest.The German regulator also investigated possible market manipulation by short sellers and journalists, and whether Wirecard failed to meet its disclosure obligations. It asked Munich prosecutors to take both matters further.A spokeswoman for Wirecard didn’t respond to an email seeking comment for this story. A Finance Ministry spokesman declined to comment on the case, while telling reporters the government seeks to safeguard “a healthy and competitive financial industry” in Germany.When it came to Wirecard, the authorities “limited themselves to the tiniest accusation,” said Armin Stracke, a former trader and Wirecard investor who filed a complaint with BaFin this year alleging that the company had misled investors.BaFin is still probing whether Wirecard’s suspected accounting issues constituted market manipulation. Unlike in other investigations, the regulator is reliant on the assessment of other authorities in this matter, the spokeswoman said.“BaFin started its investigations early on, but sadly that couldn’t prevent the striking losses for investors,” said Florian Toncar, a German lawmaker from the opposition Free Democrats. “It would be very good to see BaFin use the tools at its disposal to quickly provide investors with clarity.”Some German lawmakers want to expand BaFin’s powers to avoid future financial blow-ups. For Burghof, the finance professor, it isn’t so much a question of more power as exercising greater discretion within the regulator’s remit.Lenders’ HelpWirecard’s woes mark another low for Germany Inc. after the emissions cheating scandal that engulfed its carmakers and billions of dollars that Deutsche Bank AG paid in fines and legal settlements for misconduct following an aggressive expansion as a global investment bank.Wirecard’s ascent probably wouldn’t have been possible without its lenders. Deutsche Bank, Germany’s biggest bank, even extended credit to former CEO Markus Braun that was collateralized with Wirecard shares, a transaction known as margin loan. A Deutsche Bank spokesman declined to comment on individual clients.“A lot of sides are responsible,” Tim Albrecht, a fund manager at Deutsche Bank’s DWS asset management unit, said in an interview with Frankfurter Allgemeine Zeitung. “That starts with the institutional failings at Wirecard and goes all the way to the banks who sent positive signals with their credulous analyst reports.”Now, Germany’s banks and regulators are putting Wirecard under the microscope. While BaFin continues to investigate, at least 15 commercial lenders, including Commerzbank and ABN Amro Bank NV of the Netherlands, are negotiating about the next steps, Bloomberg reported on Friday.Wirecard, for its part, said it’s in “constructive talks” with lending banks.(Updates to add that Wirecard withdrew its recent financial results in second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It’s a big week ahead, with June’s prelim PMIs due out. We can expect COVID-19 and stimulus to also influence. Dire PMIs it will get choppy.