2016-08-03 15:18:29

It seems that negative sentiments prevail in the global stock markets. The decline in oil prices, steady demand for safe-haven assets, such as the Yen and gold, the rise in yield of Treasury bonds (e.g. the yield on 10-year U.S. Treasury bonds increased to 1.537% on Tuesday from 1.499% on Monday) cause the decrease in demand for risky assets.

On Tuesday, the index Dow Jones Industrial Average fell to the lows of the year.
DJIA fell by 0.5%, the index S&P500 - by 0.6% and Nasdaq Composite by 0.9%.

European stock indices also remain under pressure. On Tuesday the index STOXX Europe 600 fell by 1.3%, German DAX - by 1.8%, British FTSE - by 0.7%, and French CAC – by 1.8%. The leaders of the decline in the index EuroStoxx600 were the shares of the banking sector. The shares of Commerzbank fell by over 9%. Trades of the shares of Italian UniCredit SpA were suspended after the decline of 5% on Tuesday.

The company STOXX Ltd. Announced on Monday evening that the shares of Credit Suisse Group AG and Deutsche Bank AG will be excluded from the Stoxx Europe 50, due to the reduction in market value since 8 August. Shares of the Credit Suisse fell by 6.2%, while Deutsche Bank securities fell by 4.8%. As a results the shares of the Bank fell by 50% since the beginning of the year. It seems that after-effect of Brexit will continue for a long time.

According to today’s data from Markit Economics, composite index of purchasing managers (PMI) in the manufacturing sector of Eurozone was revised upward in July to 53.2 from 52.9, exceeding the level of 53.1 in June. Revised index of business activity in the service sector of Eurozone was also positive in July (52.9 vs. 52.7).
European economy is slowly recovering after Brexit, which reduces chances of monetary policy easing in EU, which in its turn, is a negative factor for the European stock market.

At the beginning European session the index EuroStoxx50 is declining trading at yesterday's closing level of 2905.0. It is likely that the decline will continue until 13:00 (GMT+2) tomorrow when the Bank of England will take interest rate decisions.

It is expected that volatility will be high not only in currency pairs with the pound, but also in the British index FTSE100 and European stock indices, including the index EuroStoxx50.

EuroStoxx50: stock indices are declining. Fundamental analysis for 03.08.2016.