Daily Financial Markets Update: Weak Earnings from Sony, Panasonic – May 2, 2016

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US economic data released last Friday printed mixed results, causing equity indices to return some of their recent gains and futures to stay in the red. The Dow 30 index closed 57.12 points down to 17,773.64 (-0.32%), the S&P 500 index edged 10.51 points down to 2,065.30 (-0.51%) and the Nasdaq was 29.93 points lower to 4,775.36 (-0.62%). Dow 30 index futures for June delivery are down 8 points (-0.05%), S&P 500 futures are down 1.50 points (-0.07%) and Nasdaq futures are down 8.50 points (-0.20%).

News of Puerto Rico’s looming default is currently weighing on global market sentiment, as the US territory is on track to miss a major debt payment to its creditors this week. Weaker than expected earnings data from Sony and Panasonic on Friday also contributed to the risk-off flows.

The S&P 500 VIX, which is considered a gauge of market uncertainty, rose 0.48 points to 15.70 (+3.15%) to indicate the presence of risk aversion. The US core PCE price index posted a 0.1% gain as expected while the quarterly employment cost index rose 0.6%. Personal income was up by 0.4% but personal spending lagged with a mere 0.1% uptick. The Chicago PMI showed a sharper than expected fall from 53.6 to 50.4 versus the projected dip to 53.1 while the University of Michigan consumer sentiment index was downgraded from 89.7 to 89.3.

Chinese and UK markets closed today

Over the weekend, China printed its official PMI readings. The manufacturing index declined from 50.2 to 50.1 instead of rising to 50.3 while the non-manufacturing index slid from 53.8 to 53.5. Chinese stock markets are closed on a Labor Day holiday today while UK banks are closed in observance of May Day. In Japan, the final manufacturing PMI enjoyed a small upgrade from 48.0 to 48.2 for April.

European markets closed in the red on Friday as well. The German DAX was down 282.18 points to 10,038.97 (-2.73%), the French CAC 40 fell 128.40 points to 4,428.96 (-2.82%), and the Euro Stoxx 50 was down 91.32 points to 3,034.11 (-2.92%). German DAX futures for June delivery are down 253.3 points (-2.45%), French CAC 40 futures are down 117.15 points (-2.61%), and Euro Stoxx 50 futures are down 80.5 points (-2.63%). Euro zone flash CPI readings printed weaker than expected results on Friday, reviving talks of additional easing, but the flash GDP reading beat expectations with a 0.6% growth figure.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.