Current Futures: Dow -92.00, S&P -10.50, NASDAQ -15.25

European markets opened lower, in a repeatable pattern of trade recently, while S&P futures fell to the lowest level since last Wednesday. The main drag on the global equity markets seems to be the high valuation of most companies related to their earnings forecasts.

Commodity stocks were the main decliners throughout the Asian and the European stock market, reversing some parts of the strong gains seen over the recent weeks. “The gains in the commodity market started as a rising number of market participants consider that the worst may be behind,” Trade Team said. “Since the low set thorough the last three months of trading, crude oil rose 110%, while other raw materials as metals, posted double digits gains,” they said.  

Since the beginning of March, global equity markets have risen nearly 40%, erasing most of the declines seen during the first three months of 2009. However, earnings still lag way behind the recent uptrend, making the ratio between share price and earnings reach the widest level since 2004, Trade Team noted.

Only a handful of shares moved higher on Monday morning in Europe. On the German Dax, only 3 companies were trading above the break-even line, while on the U.K. FTSE, 5 out of the 99 members were trading in the green, from which only Lloyd advanced more than 1%. As expected, the worst performing sector in Europe was the raw materials, declining on average 3%. As a note, the trading volume in Europe was relatively light.

Overnight, the Japanese Nikkei lost 96.15 points (0.95%) to 10,039.67. The Australian S&P/Asx declined 30.50 points (0.75%) to 4,031.70. The U.K. Ftse declined 62.31 points (1.40%) to 4,379.64, while the German Dax lost 64.90 points (1.28%) to 5,004.34.

Crude oil for July delivery was recently trading at $70.95 per barrel, lower by $1.10.

Gold for July delivery was recently trading lower by $7.10 to $933.60.

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