by Martin Armstrong
A morning where PMI’s (Purchasing Managers Index) continue to rule the markets. China’s reaction was somewhat muted after mainland index rallied to close with a strong 1.85% performance but that was countered by the Hang Seng dropping 1.8%. The RBA surprised the markets with a 25bp cut in rates to take key rates back to 1.75%. ASX liked the news though and rallied 2.1%. Tokyo cash market remains closed. In late US trading both the Nikkei and HSI futures contracts are around 0.9% lower.
Having seen a mixed Asian session most European indices were unsure in which direction to go and so we saw an unchanged opening across the board. However, it was not too long before bank earnings provided the answer. HSBC was the first releases – an 18% drop in pre-tax profits, shares down 1.8%. Commerzbank reported a €163mio profit for Q1 ‘16 (a drop of 52% YoY; shares closed -9.5%) and also UBS reported a €1.4bn profit against a YoY comparison of €2.4bn (shares closed down 7.5%). Banks shares led most indices lower and so we saw DAX, CAC and IBEX all between 1.6 and 2.9% lower whilst FTSE closed 0.9% down.