In the last trading session of the previous week, the stock indices showed a single negative trend and closed in the red zone. Dow Jones fell by 0.35% (21674.51), S&P 500 declined by 0.18% (2425.55), Nasdaq down 0.09% (6216.53). European markets were down in the single dynamics. The German DAX slipped 0.31% (12165.19), the FTSE 100 fell by 0.86%(7323.98).
Today it is expected a few publications of the macroeconomic data that could affect investors' decisions during the trading sessions.
At 15:30 MSK the Volume of wholesale sales in Canada for June
At 15:30 MSK the national activity Index from the Federal Reserve Bank of America Chicago in July
Negative sentiment now is prevailing at stock markets around the world. The main factors for this, as well as the declining for the second session, are the tragic events in Spain. There were a new attacks by Islamic militants in another European country, and even in the height of tourist season, demonstrated the unavailability of European security forces to effectively counteract this. It increased the worry throughout the civilized world. As a result, investors are seeking how to reduce risk, and they close long positions in the securities of European companies.
In the U.S. market to the negative external background from Europe it was added factors of instability with personnel in the Donald Trump administration. After the dismissal of Stephen Bannon who was a chief political and policy adviser of the President, there are now actively spread rumors about the possible resignation Gary Cohn also, who is the economic adviser. In addition, on the eve Donald Trump has abandoned plans to create a special committee which would advise him on the problems with infrastructure investment. While last week it was also announced the closing of two other Advisory Councils at the presidential administration, which included the heads of major U.S. companies. All this cannot but arouse the fears of the impossibility of implementation by the President of important reforms, which were laid to the pre-election program. Additionally there is the fact that the attempt to perform the task on undoing of ObamaCare failed miserably, it was rejected by Congress.
Of course seeing this state of affairs, investors, who bet on the change in infrastructure, are looking for ability to take out the invested funds painless, reducing long positions. The decrease in the index of wide market S&P 500 has continued, now it is clearly seen that the uptrend was broken, and the next downside target could be at the level of 2400 p. If the negative trends will have development the new stop of the fall may be at level of 2330 points.
Despite the oppressive situation, there is still hope for the hike of indexes to new heights. Despite the fact that there are a lot of visible failures of Donald Trump in the implementation of the reforms, macroeconomic indicators in the bulk talks about the growth of the economy. On Friday the support to the benchmarks was provided by preliminary consumer confidence index of Michigan University. Its value rose in August up to the level of 97.6, which was the highest since January; the previous value was 93.40 p. At the same time the consensus forecast of analysts predicted increase only up to 94.00 p. Growth in consumer activity of the Americans also contributed to the positive trend on the labour market and the improvement of the economic situation.
From corporate news it wants to note the growth of capitalization of the cosmetics company Estee Lauder, whose shares rose by 7.24% after the publication of quarterly financial results, which were better than analysts ' expectations.
On Friday, the increase in oil prices was more than 3.0%. This leap was due to the publication of data from Baker Hughes about reducing the overall number of drilling rigs operating in the United States, which has continued for the 2nd week in a row. This is a significant breakthrough in the market of "black gold", as the steady trend in the growth of this indicator has continued for more than a year. Despite the sharp rebound on Friday as a result of the week oil dipped for 0.6%.
Sincerely, Global FX chief analyst Sergey Melnikov