After a bad week the German DAX continues its downward movement. The downturn in the Eurozone is fueled by the terror attacks in Spain and the political instabilities in Washington. Two hours before close the German Index is down 0,84% at closely 12050. In the afternoon the DAX tried to outbreak and had a fast rise from the 12100 mark up to the 12140 point mark, but rapidly went crashing down after that.
The major U.S. equity indexes are about to start the new week coming off their worst fortnight of trading in quite some time. The most recent five-day stretch saw a spike in volatility, and the major averages shed more of their value. There were a number of factors that came together to weigh on the market, most notably a negative reaction to President Trump’s commentary on the tragic event earlier this month in Charlottesville, Virginia and emerging worries that the fallout will be that the President and Congress will be unable to pass some of his business-friendly agenda, including tax reforms. That, along with worries about what the Federal Reserve’s possible decision to begin reducing its $4.2 trillion balance sheet by selling Treasury bonds and mortgage-backed securities will have on the U.S. economy, pressured the world equity markets. Adding the aforementioned factors up, the Dow Jones Industrial Average, the NASDAQ, and the broader S&P 500 Index are all down around 2% over the last fortnight of trading. Even more discouraging was the selling that we saw into Friday’s closing bell, and that came despite news that President Trump’s top aide Steve Bannon was removed from the White House staff, likely bringing with him his protectionist economic policies. The initial sense on Wall Street was that this would be good for the market (the averages rallied on Friday shortly after the news broke), as it would likely mean that President Trump’s top economic advisor and National Economic Council Director Gary Cohn will remain in his position, which would be good news for Corporate America, Big Business, and Wall Street. This situation, though, remains very fluid and may mean more twist and turns for the near-term performance of the world’s equity markets. Mr. Cohn’s commitment to the Administration bears watching, as many pundits believe that if he was to resign from the White House staff, it would lead to a notable correction in the equity market. Looking ahead to the week at hand, we still expect the world’s equity markets to be driven by the ongoing political news from Washington D.C. Overall, we think that any news or actions seen as possibly impeding the Administration’s ability to get some tax reforms passed will have on detrimental effect on the U.S. equity market. The market has risen significantly since last November’s Presidential Election on hopes that the new Administration will get some business-friendly policies passed, including the discussed tax reforms. That said, we do get a few reports on the U.S. economy, including data on existing home sales and durable goods orders. Investors also should be aware that the Federal Reserve’s annual Jackson Hole, Wyoming confab will take place later this week, which may bring more clues about how the central bank will proceed with regard to monetary policy over the remainder of this year.
This week notable earnings:
- HP Inc.
- American Eagle Outfitters
- Abercombie and Fitch
- Staples Inc
- Tiffany & Co.
- Delta Natural Gas Co Inc
Total SA agreed to buy the oil and gas unit of A.P. Moller-Maersk A/S, the French company’s biggest acquisition since 1999 and another sign of the accelerating pace of energy deals after a long downturn. Total will pay Maersk with $4.95 billion of its own shares and assume $2.5 billion of the Copenhagen-based company’s debt, according to a statement on Monday. The full transaction value of $7.45 billion is above what some analysts were expecting and Maersk shares jumped as much as 5.7 percent following the announcement. Total’s Chief Executive Officer Patrick Pouyanne is following through on a hint last month that he was ready and willing to make acquisitions to grow production, taking advantage of a plunge in company valuations, the cost of drilling and other equipment during the three-year industry downturn. The Maersk assets will boost the French giant’s business in the North Sea, adding to deals earlier this year that expanded its presence in Uganda and Brazil. “We had the feeling that on the North Sea, we had to go a step further to be more competitive,” Pouyanne said on a call with reporters. Maersk had been considering spinning off the oil and gas assets in an initial public offering, but “we offered them another option.” The deal ranks among the largest that a super-major has done since oil prices crashed in 2014. Royal Dutch Shell Plc agreed to buy BG Group Plc for $52 billion in 2015 and has been reaping the benefits since the transaction closed the following year. In January, Exxon Mobil Corp. agreed to pay $5.6 billion in shares, plus a series of contingent cash payments totaling as much as $1 billion, for drilling rights in the Permian shale region of Texas. Energy deals have picked up pace more broadly in recent months as the industry puts the worst of the slump behind it, although major oil companies have tended to be sellers. BP Plc has offloaded assets including a $1.7 billion stake in a Chinese petrochemical venture and Shell exited its Irish venture for $1.2 billion. “We like this deal,” Jason Kenney, an analyst at Banco Santander SA, said in a note. The transaction is “timely and opportune” with Brent crude, the international benchmark, trading at about $52 a barrel, he said.
Commerzbank announced it would end its credit plan partnership with BNP Paribas. 300’000 contracts with a total volume of 3,5 billion Euro will be handled solely by the German bank. During this process 150 employees will be transferred. The Credit Plan had initially been closed between Dresdner Bank and the French Bank and was taken over by Commerzbank with the acquisition of Dresdner Bank in August of 2008.
Sir of Finance 