The upward rally in the stock markets continues. On Friday, the major U.S. indices showed single trend and has closed in the positive zone. Dow Jones gained 0.72% (19756.85), S&P 500 rose by 0.59% (2259.53), NASDAQ added 0.50% (5444.50). European markets also continue their growth. German DAX rose by 0.22% (11203.63), British FTSE 100 up to 0.33% (6954.21).
Today is scheduled a few publications macro-economic data that will be important for investors during the trade session.
At 07:30 MSK Tertiary Industry Activity Index of Japan will be published, expected MoM value is 0.3%.
At 22:00 MSK Federal Budget Balance of USA for Nov will be published, expected value is -135.0B.
Also during the week there will be some key events.
First of all, Wednesday will be the long-awaited meeting of the Federal Reserve, where can be made the decision to raise the refinancing rate. Now for market participants the future increase in rates is obvious, since the probability of this event is estimated at more than 98%. This year it will be the first rate increase, and the second within ten years. And of course, this event has been already included to price by the markets. Therefore it is more important not a statement but the subsequent press conference, at which representatives from the Federal Reserve will talk about the forecast for the development of the economy, inflation and new rate revisions in the coming months. Now the probability of another rate increase in February 2017 close to 90%. The future dynamics in the stock market depends on allusions to the confirmation or refutation of that.
On Thursday, the next day after the Fed meeting, it is planned conference of elected President of Donald Trump and his family members. At the meeting with journalists, he is going to talk about his plans for the transfer of the business to their adult children to have more time for his presidential duties. Investors' attention will focus on the announcements of his next steps in the development of the economy.
On Saturday 10 December there was a meeting of non-OPEC countries in Vienna, where the decision was made of the total reduction of oil production for 558 thousand barrels per day. This decision is applicable for the cartel, which at the end led to the first from 2001 a joint agreement about the reduction of oil production. Russia has agreed to production cuts in the amount of 300 thousand barrels per day. Also at the meeting in Vienna was attended by eleven countries, including Kazakhstan, Mexico, Bahrain, Azerbaijan, Malaysia, Oman, Brunei. The agreement will enter into force from the beginning of 2017 and continuing for six months. Participants also discussed the possibility of extension for another six months. The supply reduction will affect the growth of oil prices will lead to stabilization. During today's Asian session, WTI crude oil opened with the huge gap at level of 54.00 dollars per barrel, which is 2.5$ above Friday's closing. It is likely that growth may continue, but before that, it might be correction to close the gap. The nearest resistance is at the level of $ 56,50 per barrel. Global technical upside target may be in the range of 77 to 82$ per barrel for WTI.
After signing the agreement, the main news for market participants will be the confirmation of the execution, as well as increased supply from other countries.
Sincerely, Global FX chief analyst Sergey Melnikov.