Good Morning.


European indices traded lower toward the end of yesterday’s session. The Euro Stoxx50 dropped 1.01%, ending the day at 3153.75 whilst the CAC 40 also traded lower by a similar percentage. The French index closed at 4305.31, 1.03% lower than its opening level. The Spanish IBEX fell 1.23% to close at 10475.90, dropping 1.23%. The FTSE 100 and the German DAX positively managed to keep losses within the 1% range. These indices were down by 0.53% and 0.65% respectively. The FTSE 100 ended trading at the 6710.45 level whilst the DAX ended its session 9719.41.

Although investors may have expected that European indices will end their trading in lower levels, given the indications at the open, the magnitude of the losses may not have been expected. Infact, European stocks were little unchanged at the open, after they had recorded their biggest jump in more than a week the previous day. Trading was also affected by the speech of Janet Yellen which was to come later on in the day.

A data report published yesterday also showed that German Investor Confidence fell in the month of July. The ZEW centre for European Economic Research published its report showing that the confidence gauge dropped from 29.8 in June to 28.2. This gauge aims to predict economic developments six months in advance.


US stocks followed in the tracks of European stocks also closing in negative territory. The Dow Jones Industrial Average was the only index to add to its open. The index closed 0.03% higher, taking its level to 17060.68. The S&P 500 index was marginally lower, closing at 1973.28, dropping 0.19%. The Nasdaq was affected the most in yesterday’s trading as it dropped 0.54% to end the session at 4416.39.

The US stocks were significantly affected by Janet Yellen comments in the afternoon. It was stated that some sectors within the economy had excessive valuations which were influenced by better-than-estimated bank earnings. Yellen also stated that the United States’ Federal Reserve must continue with its economic stimulus as “significant slack” remains in the labour market. To further her point, she also highlighted that inflation (as in all other major economies) is still below its target level set by the central bank. Positive retail sales data showed a broad increase in June. This may have helped the US economy rebound in the second quarter. Yellen added that the Fed will keep benchmark interest rates low for a considerable amount of time after ending its tapering exercise, even if it sees improvements in the economy and the job market. Meanwhile, the US Dollar saw increases in its valuation yesterday.

Furthermore, Beige Book data is expected today whilst the numbers for US Jobless Claims, the Philly Fed Survey and the number of Housing Starts is expected tomorrow.

JP Morgan Chase / Goldman Sachs

The banks’ stocks traded upward yesterday. JP Morgan Chase added 3.5% whilst Goldman Sachs increased by 1.3%. These two banks led the US financial sector yesterday after reporting better than expected revenue from their fixed-income operations. This contrasts with the banks’ recent experiences which have seen lower profits given the slowdown in the Fed’s bond buying exercise which led to fewer trading by fixed-income clients.

Apple / IBM

Apple and IBM are to join forces in order to develop new business software for the users of Apple iPads and iPhones. According to a statement released by the two companies, the plan is to create software apps which will be able to run on the Apple devices whilst working with IBM’s data analytics and cloud services. IBM will also be expected to sell Apple’s tablets and phones to its customers whilst Apple will supply the customer-service support for the applications produced. This synergy should enable Apple to acquire a significantly larger portion of the market for corporate users of smartphones and tablets; potential customers who have long been devoted to IBM’s products.

Analysts have regarded Apple’s strategy as an extremely intelligent way of further tapping into the enterprise space in order to reach the clientele which have never thought of using Apple devices. Apple will get a greater exposure to a sales force that will push its devices into companies while IBM will be able to build a stronger relationship with Apple as one of its main partners. Apple will continue to work on gripping the corporate market which was once held strongly by Blackberry Ltd.


The company is expected to announce job cuts as soon as this week. If the expectation is correct, this restructuring exercise may be the largest in the company’s history. The company is aiming to lower its costs significantly by reducing its payroll possibly in areas such as Nokia and divisions of Microsoft that overlap with that business. It may also potentially reduce costs from its marketing and engineering divisions. Microsoft is also seeking to integrate with Nokia Oyj’s handset unit.

Have a Good Day,