Yesterday stock indices showed a decline in a single dynamics and closed in the red zone. Dow Jones stepped back by 0.29% (21467.14), S&P 500 dipped by 0.67% (2437.03), the Nasdaq fell by 0.82% (6188.03). European markets were also adjusted downward. The German DAX fell by 0.82% (12814.79), British FTSE 100 sank 0.68% (7472.71).
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 02:50 MSK the meeting minutes monetary policy of Japan
At 09:35 MSK the President of the Bank of Japan Governor Haruhiko Kuroda speaks
At 14:00 MSK the statement by the representative of the Bank of England Haldane
At 17:00 MSK Sales in the secondary housing market report for May
At 17:30 MSK crude oil inventories
At 17:30 MSK the Data on excess reserves of oil in Cushing (Oklahoma)
European markets are recovering after the recent rise, driven by the results of the parliamentary elections in France. The majority of seats went to the supporters of the new President Emanuel Macron. The main leaders of the correction become the oil companies against the backdrop of falling prices.
An outstanding event yesterday was the decline of the British pound by 0.8% to the level of $1.263 after Bank of England Governor Mark Carney said that the regulator may soon raise key interest rate.
The continuation of the down trend in the hydrocarbons reflected in the U.S. market, where the indices showed a negative movement. A special contribution was from the decline in oil companies' shares. So, ChevronTexaco came into the drawdown of 1.2%, the capitalization of ExxonMobil gone down by 0.8%.
Confusion among of investors was related to the contradictory statements by different representatives of the Commission of open markets. In Tuesday President of the Federal Reserve Bank of Dallas Robert Kaplan said that he would like to see more evidence that the period of decline of the rate of inflation is over, before raising key rates again. Kaplan also said that he supported the recent decision to hike rates, but now he would like to see more data showing that the slowdown in inflation is temporary. At the same time the Chairman of the Federal reserve Bank of Boston President Eric Rosengren noted that the era of low interest rates in the United States carries risks for economic stability, and the fed should take this into consideration during decision-making and though smoothly, but it should continue the policy of monetary tightening.
According to the results of yesterday's speeches of the representatives of the FOMC, the futures for course of fed policy on the CME are showing probability of 51% that rates will rise this year. On Monday this tool showed 41%.
Yesterday the energy market and the continued decline of oil set the tone for most stock exchanges of the world. Oil-dependent currencies came under pressure. The U.S. dollar rose against the Canadian 0.3% and 1.8% against the Russian ruble. The Norwegian Krone fell 0.5% against the greenback.
Oil has been falling amid concerns of oversupply. Measures taken by OPEC+ are clearly insufficient. There are no any additional positive news against the background of increasing shale oil production, the growth of supply from Nigeria and Libya, unfulfilled expectations from the start of the driving season. It is hoped that after reaching the support level of $42.5 per barrel oil will stay in the consolidation. Now published last night data of inventories can contribute to that. It fell slightly more than expected, as well as their confirmation today in a report from the US Department of energy.
Sincerely, Global FX chief analyst Sergey Melnikov.