European markets are trading lower this morning as the negative sentiment from the U.S. markets has filtered through. On Wall Street, it was close enough to be a blood bath last night and as major influencer or leader of the markets experienced a brutal sell off and broke some major levels. Apple is a prime example for the above and it broke its 200 day moving average towards the downside. Most institutional investors consider the 200 day moving average as a buy opportunity, but if the price fails to bounce back up from this level, it is usually considered as the point of sell off.
The Greek stock market is still the primary focal point when it comes to the European markets and no matter what happens, traders are not going to move their focus away from this arena. Yesterday we had one of the most fragile day in Athens when it’s stock market opened. Investors used this opportunity to punish the market with a maximum sentence as the Greek banks closer towards their daily maximum limit level of 30%. The Greek stock market, however, recovered some of its losses and closed at 16 percent level.
Today the main question will be if the Greek stock market will see a positive trend and how long it will take for the market to recover those losses. Sentiment is still very depressing as the manufacturing PMI reading came in at 30 whereas, it is the level of 50 which differentiate between contraction and expansion. Once again, there should not any surprise for the manufacturing PMI data to fall to this level given that the stock market was closed for 5 weeks and there is a limit of daily cash withdrawal limit. Manufactures confidence are completely shaken under these circumstances and the last thing they want to do is to commit more capital.
The commodity rout depended further yesterday as investors added to their short positions yesterday. Brent oil, which is more of a international benchmark, dropped below $50. Traders are not finding their appetite for Copper which made another multi year low on the back of the concerns that the Chinese government will not be able to maintain its 7 percent GDP target and most of the economic data out of the country is battering base metal prices further.
Back in the UK, all eyes will be on the construction PMI data and the forecast is for 58.6. This is an upbeat sentiment for the British pound given that the previous reading was at 58.1. Moreover, the manufacturing PMI data were also positive yesterday, which pushed the Sterling higher against the basket of currencies.