Future markets are extremely sensitive to the ongoing trade war between China and the US *BMW continues to invest in technology *May needs to make a decision
European markets are trading lower because of the weakness in the German factory order data released today. The data was much softer than the forecast and this amplifies the concerns about the economic health of the country. The actual reading was 0.6 percent, against the estimate of 1.6%.
One can always debate what can really derail the equity market sentiment? Is it the softness in the economic numbers, geopolitical tensions or the Trump tweets? Clearly, president Donald Trump's tweets triumph everything, the example of this can be seen yesterday. The question is if investors should consider such dramatic moves as an opportunity? Especially, when the major benchmark indices have made an all-time high.
Well, there are two sides to this, the equity market is not cheap. So buying at these prices doesn't necessarily mean bagging a bargain. However, the famous saying is: the trend is your friend, and looking at the major indices: S&P 500, Nasdaq, the Dow Jones, one can clearly see that the trend is skewed to the upside. Particularly, the FOMO element gathers more force when the year to date performance becomes a focal point. The Nasdaq index is up whooping 22.43 percent year to date, the S&P 500 is up 16.98 and the Dow Jones 13.34 percent. This makes the picture clear why one doesn’t want to stay on the sideline.
As the UK market was closed yesterday because of the bank holiday, traders will have to measure the trump tactic very carefully. Looking at the last 24-hour market reaction, it becomes clear that traders do not really believe that Donald Trump is going to do what he said in his tweet. They believe this was nothing but just a tactic. It has worked to an extent because the Chinese negotiators do understand the underlying risk better now. No one wants a war, it is not beneficial to the US, no matter how Trump sugar coat’s this and it does do any favor to the second biggest economy of the world, China.
BMWs Reported Drop In Profit
The earnings season is still in full swing and we do not want to see the economic data becoming ugly because this will exhaust the upward momentum, particularly when the European Elections are just around the corner.
BMW reported it's quarterly earnings today, the company's profit slumped nearly 80%. Earnings before tax dropped 589 million euros. This was mainly due to the increase in spending on new technology and competition in some markets. These two factors pushed the profit margin lower. Generally speaking, it is normal for this to drop especially when a company starts to invest in new technology and the new models will hit the market soon. Thus, I do not see any particular reason why the stock shouldn't be performing well in the near future.
Brexit and Theresa May
In the currency market it is all about sterling and brags drama around it Theresa May the British prime minister is going to sit down with Labour Party. failure to have any resolution may trigger the chances for another referendum or even emergency election. there are also strong possibility battery some mate maybe replace buy a breakfast hardliner while Michael Barnier, the EU lawmaker is eagerly looking for some positive outcome.