Good Morning.


The performance of European indices was positive yesterday. All major indices ended the day’s trading at higher. The Eurostoxx 50 added 0.12% reaching 3244.28, the DAX closed at 9940.82, rising 0.49% whilst the IBEX 35 and the CAC 40 rose by 0.25% and 0.06% to reach 10714.20 and 4529.75 respectively. This performance may have tied greatly with the fact that on Monday, the ECB president Mario Draghi continued to kindle expectations that the ECB stands ready to counterattack the low inflation being experienced in the Eurozone with further cuts in interest rates and possible bond purchases. It is evident that the ECB is getting increasingly uncomfortable with the trading bloc’s low levels of inflation; which has diverged significantly from its target levels.

Further action by the ECB may also be influenced by the words of Economist Paul Krugman who challenged the ECB to take action before it may be too late as the European economy faces further downward pressure in terms of inflation. Analysts will confirm their expectations next week when Mr Draghi addresses the public next week.


The Durable-goods orders reading for April was published yesterday. Adjusted for seasonality, an increase of 0.8% was recorded over the previous month. This went against the expectation of a 0.7% decline. The major impact within this figure however came from an increase in the defense sector of the economy. If this had to be excluded, the revised figure would be a drop of 0.8%, which was driven mainly by lower capital spending by businesses. This increase succeeds the previous month’s increase of 3.6%.

The consumer confidence data also improved. The reading for May added 2.3 to April’s revised figure of 81.7. This shows that consumers were more optimistic about today’s economic scenario, as well as that of the upcoming months. Home prices in 20 US cities also rose on previous months’ figures, albeit at a slower pace.

The markets reflected this positive news by closing higher. The S&P Index rose to an all time high yesterday evening. The S&P 500 added 0.6%, closing at 1911.91 whilst the Dow Jones and the Nasdaq added 0.42% and 1.22% to close at 16675 and 4237.07 respectively. Gold prices dropped in value yesterday; an indication that investors may be comfortable with taking on higher levels of risk in other assets.


Tensions have increased in crisis-hit Ukraine where the country’s military resorted to violent attacks on separatists. More than 50 pro-Russian activists were killed by Ukrainian aircraft and paratroopers in an assault that has gone into its second day. This continued tension however, did not appear to have any significant negative impact on European Markets. The violence is a clear indication that Poroshenko, the newly elected president, faces a mountain to climb in attempting to reunite Ukraine.


The Chinese government is reviewing whether its domestic banks should continue to rely on IBM supplied high-end servers as these may compromise the Asian country’s financial security. Local banks are being asked to substitute these American manufactured servers with a local brand as part of a trial exercise. This development comes a week after American prosecutors indicted five Chinese military offices for allegedly hacking into US companies’ computers and stealing secrets. Last week, the Chinese government also said that it will assess technology companies operating in the country.

Meanwhile, China’s biggest banks are expected to publish their highest ratios for bad debts since 2009 after the number of late payments on loans has swelled to a five-year high, showing signs of weakness in terms of the borrowers’ ability to keep up with their commitments amid an economic slowdown. This indicates deterioration in the quality of Chinese banks’ assets as well, together with rising liquidity hurdles for borrowers.


A formal criminal investigation into GSK has been initiated by Britain’s fraud office. This will add to the ongoing bribery claims against GSK which are being made in China and in four other countries. No in-depth details have been provided as yet.

Have a Great Day,