Yesterday stock markets of America showed reliable upward momentum and closed at new highs. The Dow Jones jumped by 1.46% (21115.55), the S&P 500 increased by 1.37% (2395.96), Nasdaq increased by 1.35% (5904.03). Dynamics on European markets were similar to the American. The index of Frankfurt Stock Exchange DAX rose by 1.97% (12067.19), British FTSE 100 rose to a new high of 1.64% (7382.90).
Today it is expected the number of publications of the macroeconomic data and the speeches of the monetary authorities that could affect investors' decisions during the trading sessions.
At 02:00 MSK FOMC member Brainard speaks
At 09:45 MSK Swiss GDP for the fourth quarter
At 16:30 MSK the Number of initial applications for unemployment benefits USA
At 16:30 MSK the Canadian GDP for the fourth quarter
At 13:00 MSK the Index of consumer prices in the U.S. for February
At 16:30 MSK the Canadian GDP for December
Yesterday European stocks rose strongly because of the impulse from overseas colleagues. The British FTSE 100 index is at historical peaks now, due to the weakening of the national currency amid a lack of clarity of Brexit and the strengthening of the dollar. PMI of the Eurozone pleased investors which were better than expected. The DAX also came closely to the historical highs, but its dynamics are weaker than others. Amid the General positivity and growth in stock markets there are a number of factors that have been ignored by European investors and can have a delayed effect. This reduced production in France and Germany, it is the political uncertainty and elections in several European countries. In France in connection with the race not a day goes by without a scandal. François Fillon, one of the candidates denounced fraud with bogus jobs, and theft, but he continues to be a candidate for the presidency.
Despite the fact that the President Trump has not brought any clarity with his speech in Congress and disappointed economists, the U.S. markets have shown explosive growth and has continued to rally with greater force. The Dow Jones climbed to a new key level of 21000. The index of wide market S&P 500 reached the level of 2400 and still have a high likelihood of rising to 2450. What happens can be explained with the manifestation of euphoria and the beginning of the overheating of stock markets. It can be confirmed with the fact that this is happening against the background of constant statements by the representatives of the regulator about a possible increase in the key rate in a few weeks. After yesterday's speech of the President of the likelihood of monetary policy tightening increased by 20% and the trend is continuing. The macro economic data that mostly come out better than expectations as well as contribute to the growth of the stock market and fed rate hike, and it is able to cool the ardor of buyers. In this regard, investors ' attention will focus on tomorrow's comments Janet Yelen.
Strengthening of the dollar after yesterday's events had affect for the dynamics of oil. Its cost though sluggish but has been declining for the third consecutive session. A report on the growth of inventories and production in the United States contributed to that also. Sales are not gaining speed due to the verbal interventions of the OPEC management about a possible extension of the agreement on reduction proposals and also report on its current implementation in more than 90%. It would be difficult not only to grow but to stay at current levels for oil, in case of further strengthening of the American currency.
Sincerely, Global FX chief analyst Sergey Melnikov