Thungen Financial 4th August 2014 - Global Index Review

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Thungen Financial 4th August 2014 - Global Index Review

Last week saw all the major indexes take a step back. This week will be a key indicator as to whether geopolitical tensions are starting to have an effect on investor sentiment.

After last week's steep self off on Friday, Asian markets started the week on a more positive footing, all be it slightly down on the highs recently seen. Japanese markets fell to a 1 week low in early trading on Monday but had reversed the loses to end up relatively flat by the afternoon. Chinese markets bucked the trend as data is seen to be backing up the fact that the economy is improving and that the stimulus being employed is starting to have a positive effect.

Europe is expected to open higher today after confirmation out of Portugal that Banco Espirito Santo will be split up, but that the bill will not be footed by the taxpayers. The bank, to be split into 2 separate entities. The performing side will now be called Novo Banco and will take with it its depositors, mortgage and commercial business with the 2nd entity taking all the bad debt. A hand out of over $6.5bn is to be given to the bank however since the bank announced that it made first half loses of over €3.6bn, and the stock lost 89% of its value, only the shareholders look set to take the fall on this one. This will be the first large bank to fail since new policies were implemented and it will be a massive indicator as to whether the EU has the resilience in its financial markets to swallow this type of lose to its economy.  This along with the increased sanction on Moscow due to the Ukrainian crisis will be the main issues facing European investors this week and as news filters through we should see the loses booked late last week reverse.

The US markets were not immune to the woes in Europe as the 3 main indexes all saw steep drop offs late last week and the volatility index smashed through 27%. With economic data pointing to an economy in expansion, employment almost at full capacity and record earnings from corporations it was surprising to many that the markets reacted in such a manner. With the S&P 500 losing 2.7%, its biggest drop since June 2012 and slightly disappointing data on the employment front, the markets reactions implied a run on profit taking and not a knee jerk reaction to the news out of Europe. This week's see's earnings from the media and retail sectors and these will be key indicators as to whether the economy is indeed picking up as we have been told.

Major Global Markets as of 4th August 2014

FTSE 6,679.18 -0.76%          Dax  9,210.08 -2.10%          Dow 16,493.37 -0.42%

Nikkei 15,509.08 -0.09%          Hang Seng 24,628.06 +0.39%    MICEX 1,374.83 -0.35%

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DISCLAIMER  The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Thungen Financial Advisors. All market data within this release is for your general information and enjoys indicative status only. Thungen Financial Advisors does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.