Trading Journal

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.

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On July 6, the new tariffs on Chinese products amounting to 34,000 M.USD are being levied, and Beijing is expected to retaliate.

The agreement reached by Angela Merkel and Interior Minister Horst Seehofer to resolve the political crisis around migration has boosted European markets and especially the German stock market.

On the macroeconomic front in Germany, the PMI index for the services sector rose in June to 54.10, the highest level in the last 4 months. In the Euro Zone, the PMI economic activity index rose from 54.10 in May to 54.9 in June.

Reuters reported that the US ambassador to Germany would have informed those in charge of some of the major automakers such as BMW, Daimler and Volkswagen that Donald Trump could abandon the threats issued last month if the EU eliminated taxes on imported cars from the USA. Remember that the US president threatened last month to impose a 20% import tariff on all vehicles manufactured in the EU.

The employment report showed that the US economy created 213,000 jobs in June, up from 195,000 expected by economists. However, the unemployment rate worsened from 3.80% to 4%, compared to the maintenance estimates for the previous month. In relation to average hourly wages, there was an annual increase of 2.70%, lower than the expected 2.80%.

European markets ended today’s session on positive territory. Concerns about trade tensions between the US and China softened slightly, allowing raw material producers to overperformance. In London, the market traded higher (0.95%) following the Brexit Minister’s resignation request, David Davis, and Foreign Minister Boris Johnson.

European stock markets closed higher as investors turned their attention to the upcoming earnings season, relegating the last political and trade tensions to second place. In sectoral terms, oil companies led the gains, boosted by rising commodity prices. Also on the rise were industrial and technological companies. In London, Marks & Spencer shares fell 0.61% on the day the retailer reported its results.

Most of the Asian stock markets ended low, with the Chinese market leading the losses. At issue was the news that the United States has produced an additional list of imported Chinese products amounting to USD 200 000 per year and threatened to impose tariffs already in September. In the Japanese market, losses were led by the sectors most sensitive to global trade issues, such as the automobile, while in China the most affected companies were the producers of raw materials.

European markets ended up higher, recovering from the losses recorded in the previous session. The media industry was among the best performers after the British government clarified the conditions for the acquisition of Sky's pay-TV platform by Twenty-First Century Fox. The oil sector ended virtually unchanged on a day when the price of oil fell again in international markets. Pharmaceuticals led the gains, with one of the German companies Gerresheimer posting an increase of more than 8% after announcing an extension of its business model and raising its growth forecasts.

European indices are in consolidation, favored by the performance of the US market and the outlook for the new Earnings Season that starts today in the US, with the disclosure of the figures of three of the largest financial institutions. Meanwhile, investors continue to monitor developments in trade tensions between the US and China.

In the pre-opening of the session, European indices retreated slightly, with investors focused toward company results on both sides of the Atlantic and the meeting between Donald Trump and Vladimir Putin after the US President met last week with Theresa May, British Prime Minister. Several economic studies indicate that the victory in a major football competition has a positive impact on the GDP (between 0.25% and 0.50%) of the winning country. This economic improvement has a positive effect on the stock market of the winning country, which tends to overperformance against the index of the other country finalist in the three months following the end of the competition. While recognizing that football events have a moderate and time-limited impact on stock markets, this type of study serves to confirm how much the emotions can determine the behavior of investors and economic agents. Thus, the French CAC40 index will be accompanied today in a more particular way.

European stock markets traded higher as investors digested the reported business results and monitored the words of the Fed President. In sectoral terms, the producers of raw materials stood out in the positive, while the telecommunications companies led the losses. The technology sector was conditioned by the results reported yesterday after the US closing, which disappointed the investors. In Frankfurt, shares of Thyssenkrupp rose 9.06% following news of the resignation of the company's chairman, as a result of pressure from shareholders. The European car industry has appreciated by about 0.80%. On the macroeconomic front, investor sentiment was influenced by the IMF's lowering of its growth forecasts for the United Kingdom and the Eurozone, warning that global trade tensions have worsened economic outlook.

As Powell’s testimony did not raise any fears or alarmism in stock markets, investors were able to focus on the earnings season, rewarding good results and penalizing companies that have deceased. The first group includes Johnson & Johnson, which not only reported numbers that beat analysts’ estimates but also proved confident for the future. Netflix represented the reverse of the medal. The company’s accounts disappointed the level of revenue and the number of subscribers, which led the respective stock to a decrease of 5.24%. According to Ritholtz Wealth Management, Amazon’s appreciation this year (57%) equals nearly 35% of S & P’s earnings, Netflix’s almost 100% rise is 21%, and Microsoft’s and Apple’s represent 27% of S & P’s earnings this year. The contribution of Google and Facebook is more modest (the rise of each title corresponds to 8% of the advance of the S&P). Thus, according to Ritholtz Wealth Management, FAANG accounts for almost all of the gains made by S&P this year. From this simple arithmetic emerges the crucial importance of the quarterly results of these companies.