On the first day of this week, the stock indices demonstrated confident growth in a single dynamics. The Dow Jones rose by 0.43% (20894.83), S&P 500 rose by 0.52% (2394.02), Nasdaq-0.82% (6133.62). The European markets has not demonstrated a single dynamics and closed mixed. The German DAX lost 0.15% (12619.46), British FTSE 100 rose by 0.34% (7496.34).
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 02:30 MSK FOMC member Brainard speaks
At 09:00 MSK German GDP for the first quarter
At 10:30 MSK the Index of business activity in the manufacturing sector (PMI) in Germany in may
At 11:00 MSK Composite purchasing managers ' index (PMI) from Markit Euro zone for may
At 11:00 MSK the Index of business climate IFO of Germany in may
At 12:00 MSK hearing of the report on UK inflation
At 16:45 MSK the Index of business activity (PMI) in the US services sector for may
At 17:00 MSK new home Sales in the U.S. for April
At 18:00 MSK a Speech by ECB member, Coeure
At 22:15 MSK FOMC member the Kashkari speaks
Against the background of general decline on the European markets Britain's FTSE 100 showed an increase due to the weakening of the national currency. The pound started to decline after tough rhetoric around Brexit. The continued decline was supported by reports of an explosion at a concert in Manchester. It is assumed that it was a terrorist attack. It is likely that correction will develop on the rumors about a possible postponement of the parliamentary elections from June 8 to a later date.
Yesterday Angela Merkel in her speech to students said that at the main reasons of trade surplus of the country were weakness of Euro and low oil prices. After this statement, the single European currency grew in price, and national index DAX closed in the negative zone.
Now American investors are considering the results of the first foreign tour of the President of the country. The last point of the trip will be a meeting of the G7 May 26-27. Also Donald Trump will hold talks with new French President Emanuel Macron. There is a possibility that this tour will reduce the pressure on Trump inside the country and it will turn the attention of opponents, which ultimately have a good impact on the stock markets. The signing of the contract for the supply of arms to Saudi Arabia worth more than $ 100 billion can be considered as positive result of this trip. This news has been reflected in the growth stocks of companies of the defence sector. Lockheed Martin has added to the capitalization of 2.1%, Raytheon up 0.5%.
Oil prices are at levels of maximum for 5 weeks. Investors continue to include to price a possible extension of the Vienna Pact OPEC+. Hopes are supported by verbal interventions of the representatives of oil-producing countries. So the Minister of energy of Russia Alexander Novak said that the extension of offer reduction is possible for another 9 months. Also, analysts believe that one of the possible terms and conditions for the supply of arms from the US to Saudi Arabia, was the reduction in activity of producers of shale oil.
Sincerely, Global FX chief analyst Sergey Melnikov.