On Wednesday, the stock indices of USA showed a moderate decrease in a single dynamics and closed in the red zone. The Dow Jones slipped by 0.40% (21812.09), S&P 500 dropped 0.35% (2444.04), Nasdaq down 0.30% (6278.41). European exchanges have not shown uniform dynamics, and closed mixed. The German DAX fell 0.45% (12174.30), the British benchmark FTSE 100 added 0.01% (7382.65).
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 01:45 MSK trade balance of New Zealand for July
At 11:30 MSK the mortgage approvals BBA in the UK
At 11:30 MSK Business investment UK
At 11:30 MSK GDP
At 15:00 MSK Jackson Hole Symposium
At 15:30 MSK the Number of initial applications for unemployment benefits in the United States
At 17:00 MSK Sales in the secondary housing market of the USA for July
Yesterday's statement by European Central Bank President Mario Draghi led to the sale of the stock markets of Europe. He said that the use of unconventional measures in monetary policy has been effective. Investors assessed the rhetoric as hawkish and started to fix profit of long positions. However, statistic data of the business activity indices in the manufacturing sector kept European markets from further downside movement. For the European Union, the index rose up to 57.4, while the forecast was 56.3. For Germany, this index stood at 59.4, which is 1.7 p. better than it was forecasted.
Yesterday after the recent rally there was the correction in the US market, which may be assessed as technical, as a result, the index of wide market S&P 500 has returned into the range 2420-2450, closing at a level of 2444. The main underlying reason for the decline was the speech of president Donald Trump, he said that he is ready to withdraw from the contract on free trade NAFTA and dissolve the government, but a wall on the border with Mexico should be constructed. Quite a sharp statement could not cause concerns of market participants who had to reduce positions in the stock market, shifting the assets into tools safe-haven gold and the yen. Judging by the technical picture, the correction may still evolve until the price reaches the support level of the lower border of the range of the 2420.
Macro statistics from the USA also did not give positive factors for buyers. New home sales in the U.S. in July fell by more than consensus forecast of analysts, from 0,630 million down to 0,571 million. Today it will be published data on the number of primary applications for unemployment benefits in the United States.
The main event of this week is opening Symposium in Jackson Hole today. There will be participated the representatives of Central Banks of leading economies of the world. On Friday it is scheduled the speeches heads of the Fed and the ECB. Currently it is difficult to determine the future direction of asset prices for the investors and the symposium can be a starting point to identify trends for a few months.
Oil traders are also waiting for the results of the summit. The price for the black gold is reducing the volatility around the level of $ 48.00 per barrel for WTI. Yesterday official data for inventories in the USA came close to the expected level and was already priced in. Excess oil inventories in Cushing declined by 0,503 million barrels, which was also slightly better than expected. Prices rose slightly, but it's more like a consolidation than on the rising tendency development.
Sincerely, Global FX chief analyst Sergey Melnikov