In the first trading session of this week, the stock indices demonstrated certain growth trend and closed in positive territory. The Dow Jones rose by 1.05% (20763.89), S&P 500 up 1.08% (2374.15), the Nasdaq jumped by 1.24% (5983.82). European markets yesterday showed the maximum increasing for a long time. The German DAX shot up to 3.37% (12454.98), British FTSE 100 rose by 2.11% (7264.68), the French CAC 40 index added 4.14 per cent (5268,85).
Today it is expected a few publications of the macroeconomic data and the speeches of the monetary authorities that could affect investors' decisions during the trading sessions.
At 15:55 MSK the Index of retail sales, US Redbook
At 16:00 MSK Composite home price index S&P/CS Composite-20 not seasonally adjusted for February
At 17:00 MSK the Index of consumer confidence for April
At 17:00 MSK new home Sales USA in March
On Monday stock indices the major markets of the world opened with a large gap up and continued to grow throughout the day. The DAX exceeded its historical maximum, which was installed 2 years ago. Such was the reaction to the victory of Emanuel Macron in the first round of the presidential elections in France. Higher volatility was caused primarily with the fact that most investors did not believe in such an outcome, despite the results of the polls. Due to this, at the moment of session opening the price have not included this event, and the balance had to be recovered in a short time. The Euro has become strong sharply, EUR/USD jumped by more than 0.02, reaching six-month highs, and as a result finished the day at these levels.
After unexpectedly positive solutions of Brexit referendum and results of the U.S. elections, investors are ready for any outcome of political events, so invest decisions are making after receiving of clear facts. The value of the results of the election in France will impact far beyond its borders. Now, when confidence in the victory of the candidate with adequate markets election program is stronger, it adds the probability of a similar outcome in Germany, where elections will be held this fall. The victory of the Macron will influence the decisions of investors for a long time. Meanwhile, according to the latest surveys, the probability of his victory in the second round have increased. Now more than 60% of voters would be voted for him. It is possible to lay in the price this fact with more certainty. In the near future, it can be expected increasing of risk appetite, the continued growth of the stock markets and thus a decrease in the demand for protective assets such as gold and government bonds.
This week, European investors will be watching the results of the ECB meeting and Mario Draghi's comments on Thursday. It is expected that monetary policy will remain unchanged.
American markets also showed growth, but it was less furious than in Europe. Now there is a the problem in the U.S.A. with the acceptance of the state budget, and if the decision will not be taken by Congress before the end of the week, the government may stop work. Positive news for American investors come from quarterly corporate reports, which are mostly now going better than expected. This week such giants as McDonald's, Lockheed Martin, Boeing, Coca-Cola will report.
Despite the gap up at yesterday's opening session, oil prices rolled down by the end of the day. The pressure coming from the Euro strengthening, as well as the apparent continued growth of production in America.
Sincerely, Global FX chief analyst Sergey Melnikov.