Yesterday, stock indices were down in the single dynamics and closed in the negative zone. The Dow Jones dipped by 0.37% (19732.40), S&P 500 lost 0.36% (2263.69), the Nasdaq fell 0.28% (5540.08). In Europe situation was not better. The German DAX fell 0.02% (11596.89), the British FTSE 100 fell 0.54% (7208.44).
Today we expect a lot of speeches of representatives of the monetary authorities, and the publication of the macro economic data that can influence the decisions of investors in the course of trading.
At 04:00 MSK there was a speech by Fed Chairman Yellen.
At 12:30 MSK there will be published retail sales in the UK in December.
At 16:30 MSK in Canada will be published index of consumer prices for December.
At 16:30 MSK in Canada will be published index of retail sales for November.
At 17:00 MSK FOMC member Harker speaks.
At 20:00 MSK the U.S. President Donald Trump speaks.
At 21:00 MSK there will be published a number of drilling rigs from Baker Hughes.
At 21:00 MSK FOMC member Williams speaks.
Yesterday for the European markets, an important event was the ECB meeting. As expected in the result, the key rate remained at the same level, and also the monthly volume of asset purchases in the amount of 80 billion euros, with a validity of up to March 2017. The QE program could be expanded and could continue for a long time, until there will be reached the desired level of inflation, the size of the QE may be increased also. This result was quite expected for market participants, thus considerable increasing in volatility was not observed and the main European indices, though subsided, but the dynamics were close to neutral.
American indices opened with a gap up, that was supported by the positive data on the number of initial claims for unemployment benefits, which came in better than analysts ' expectations. But later a considerable part of investors began to close positions, removing funds to less risky assets before a key event this week, the inauguration of the elected President. As a result, the index of wide market S&P 500 suffered losses in the amount of 0.36%. But today during the Asian session the index has almost recovered.
Now more than ever, there is a strong dependence of stock markets from politics. Despite the abundance of important macroeconomic statistics and statements of the monetary authorities, the markets remain in a narrow corridor. Investors are in vagueness and awaiting the promised details of the economic program of the new administration in inaugural speech of Trump. Even twice during this week, speeches of the Fed chief failed to significantly affect the increase in volatility. In his yesterday's speech of Janet Yellen reiterated that the Fed worries the overheated economy and plans to gradually raise the key rate, in accordance with the coordinated plan up to 2019. The majority of the FOMC members agree to the appropriateness of a threefold increase this year. In turn, the Trump will strive to stop that growth rate because it benefits from a weak dollar, which will increase the competitiveness of domestic goods on the world market. There is hope that today it will be provided an understanding of future developments and expected impulse in the stock markets. And apparently, it may happen that this will be a growth in the index with weakening of the dollar.
Oil slightly adjusted upwards after a decline on Wednesday, continuing the movement in a wide side range. Investors are waiting for the results of the OPEC meeting this weekend, as well as certainty in the future movement of the counter currency, the dollar. Today the attention of market participants will focus on weekly data from Baker Hughes about the rig count.
Sincerely, Global FX chief analyst Sergey Melnikov.