US stocks continued lower in a single dynamics, increasing the tempo and closed in negative territory. The Dow Jones lost 0.61% (19971.13), S&P 500 slid 0.60% (2280.90), the Nasdaq was corrected to 0.83% (5613.71). European stocks also accelerated the speed of the correction. The German DAX fell 1.12% (11681.89), the FTSE 100 was down 0.92% (7118.48).
Today it is expected the number of publications of macroeconomic data and the speeches of the monetary authorities, which able to influence investment decisions of market participants:
At 09:30 MSK Press conference of the Bank of Japan.
At 11:00 MSK the ECB President Draghi.
At 11:55 MSK the change in the number of unemployed in Germany in January.
At 13:00 MSK the consumer price Index (CPI) in Europe in January.
At 13:00 MSK Eurozone GDP for the 4th quarter.
At 16:30 MSK the Canadian GDP for November.
At 17:45 MSK the Index of business activity (PMI) in Chicago in January.
At 18:00 MSK the Index of consumer confidence of the USA in January.
For stock markets of America, the first day of this week passed in a correction movement, which began with a strong gap down at the opening. Later, the fall accelerated, was deeply pierced the lower boundary of the recent consolidation, but by the end of the day, buyers have the strength to get back above it and close the session. This behavior of the investors is due to the sharp decline in risk appetite near historic highs, and traders are cautious amid the raging political events. The main troublemaker was a new resolution of Donald Trump on the prohibition of entry of citizens of some Arab countries and the middle East, which are associated with a possible terrorist threat. This initiative was met negatively, as by citizens as by leaders of many countries, as well as caused chaos in American airports. Then a new wave of negativity has been raised by Trump's decision to fire Attorney General Sally Yates after she ordered Justice Department lawyers not to enforce his immigration ban order. Also in America, the continuing unrest arranged by unhappy with the new President. Some States have even begun to collect signatures for the withdrawal from the country.
In the corporate sector it is suffered airlines due to migration ban. Stocks of such industry giants as American Airlines, JetBlue, United Continental reduced by more than 3%.
Although remaining pessimism on the market, it is likely that today the markets will be come into the consolidation in anticipation of the Fed meeting, which will take place this week.
Negative news also came from the energy market. Oil continues adjusting on the background of news of increased production in the United States. According to the forecast of the Pioneer Natural Resources it will be reached the maximum production level of 9.5 million bbl./day in the USA in 2017. Also, the Bank Goldman Sachs, has estimated that oil production in the U.S. will grow by 290 thousand barrels per day in 2017. The news weakened the positive impact of Viennese agreement of OPEC+. It is possible that WTI will continue to decline in the near future in the area of 51.00 $ per barrel, where it is located the lower boundary of the trading range which has begun since December, 2017.
Sincerely, Global FX chief analyst Sergey Melnikov.