On Friday, the stock markets of America showed a single negative trend and closed in the red zone. Dow Jones down 0.19% (20940.51), S&P 500 dropped 0.19% (2384.20), Nasdaq slightly went down by 0.02% (6047.61). European markets also traded at negative territory with slightly visible dynamics. The German DAX lost 0.05% (12438.01), British FTSE 100 slid 0.46% (7203.94).
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 10:15 MSK, retail sales in Switzerland in March
At 12:00 MSK the Economic forecasts of the EU
At 14:45 MSK the Minister of the Treasury Mnuchin
At 15:30 MSK the Expenditures of individuals of the USA for March
At 17:00 MSK the Index of business activity in the U.S. manufacturing sector (PMI) from ISM for April
At 17:00 MSK the Index of employment in the U.S. manufacturing sector from ISM April
This is a short week for most stock markets around the world. Today due to the Labor Day holiday closed the markets of UK, Germany, France, China, Korea, Hong Kong, Brazil. Wednesday starts a holiday weekend in Japan known as Golden Week.
The decline in the stock markets on Friday was caused investors preparation to weekends, they closed of the part of speculative positions to reduce the risk of thin market. In Friday European and American market participants evaluated the weak data of macroeconomic statistics. French GDP came out below expectations. Real growth of US GDP came in at 0.7%, it was also below analysts ' forecasts of 1.2%. Significantly slowed growth of consumer spending in the United States from 3.5% in the fourth quarter down to 0.3% in the first quarter. The growth in the index of consumer sentiment the University of Michigan was below the analysts also. Published a new level was 97 vs 98 projected.
Until the end of previous week, America lived with the real risk of a shutdown from Monday of next week, due to not the approval of the budget. But Republicans and Democrats found the way to agree each other in Congress. Sides came to a joint compromise, and adopt the budget until September 30. It is certainly a positive thing and perhaps after that appropriate reaction of the market will follow.
There are growth drivers more than the pressuring down factors at the American market now. This is a positive dynamics in the process of changing tax legislation. As well the solution of budget issue is. Good for buyers also is the continued warming of relations between China and the United States. Donald Trump at the weekend said he did not want to call China a currency manipulator, as it helps US in the conflict with North Korea.
Sincerely, Global FX chief analyst Sergey Melnikov.