On the first day of the week the stock indices continued to decline in a single dynamics, which began on Friday. The Dow Jones slipped by 0.24% (20954.34), S&P 500 lost 0.33% (2375.31), the Nasdaq index fell by 0.37% (5849.17). European markets also closed in the red. The German DAX fell by 0.57% (11958.40), British FTSE 100 up to 0.33% (7350.12).
Today it is expected a few publications of the macroeconomic data that could affect investors' decisions during the trading sessions.
At 06:30 MSK interest rate Decision Bank of Australia
At 10:00 MSK the Volume of industrial orders in Germany for January
At 13:00 MSK Eurozone GDP for the 4th quarter
At 16:30 MSK trade balance of US for January
At 18:00 MSK the Index of business activity (PMI) of Canada from Ivey for February
Positive news for the stock markets yesterday was the publication of statistics on manufacturing orders in the US, which in January increased by 1.2%, while analysts ' expectations was of 1%. Also in France during the election campaign, the Republican Party came to clarity with their candidate. Francois Fillon became, that gives more serenity in the future development of events. Earlier around his person were a number of scandals, now, despite the possible charges for the employment of his wife, Fillon is in third place among the milestones of candidates by a small margin.
World stock markets are developing the correction that started last week. Now significant pressure from a number of economic and geopolitical factors. Caution causes investors test-fired of four ballistic missiles from the DPRK. Three of them eventually reached the economic space of Japan and fell into the sea just in 300 kilometers from the coast. Also Donald Trump began to foment a new scandal on the weekend. This time the situation concern the wiretapping of his electoral headquarters by the former President Barack Obama, who has denied all charges. All of that news significantly reduces the appetite for risk from investors.
Now there is profit taking and closing of long positions to reduce risk and diversify portfolios on the stock market. The Fed chairman, Janet Yellen played a significant role in current situation. She spoke about the acceleration of monetary policy tightening and rate hike at the next FOMC meeting, which will take place next week, and that the rate increase to happen in the case of satisfactory statistics on inflation and employment. This week, if there it will not be the development of correction; it is possible to move indexes in a broad sideways range in anticipation of non-farm payrolls data in the United States at Friday.
Sincerely, Global FX chief analyst Sergey Melnikov