On Friday stock markets of America has slowed its growth, were traded without a single dynamics and closed mixed. Dow Jones stepped back by 0.01% (21080.28), S&P 500 added 0.03% (2415.82), the Nasdaq rose 0.08% (6210.19). European markets finished the trading session mixed. Germany's DAX dipped 0.15% (12602.18), the British FTSE 100 index grew by 0.40% (7547.63).
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 04:15 MSK FOMC member Williams
At 10:15 MSK the Level of employment in Switzerland for the first quarter
At 16:00 MSK ECB President Draghi
Today part of the leading stock exchanges will be closed in connection with the celebration of national holidays. America celebrates Memorial Day, UK have a day off due to Bank Holiday.
Now European markets are experiencing capital inflows. The main trigger for this movement was the success of Emmanuel Macron on presidential elections in France as it means determining of the future path of region development. Also, the reason for the rapid growth of capitalization of the European companies is the overheating of the U.S. market, where the multiplier is at the limit. Investors have been reducing risk by diversifying the assets, they open long positions in the securities of the Old World. Due to this the European indices are trading at historic highs in May.
However, on the last day of the previous week the index of Frankfurt stock Exchange DAX corrected. The main reason was the oil companies and car manufacturers due to the complications in trade relations with overseas partners. Today volatility in the European currency may be caused by the speech of the ECB President Mario Draghi from whom investors are waiting for comments on monetary policy in the region.
This morning, the representative of FOMC from San Francisco John Williams has shed light on the policy of the Federal reserve. He said, "The last thing we want to do is to fuel unnecessary or avoidable volatility or disruption – whether we’re talking about domestic markets or international markets". Most likely, the regulator will operate steadily increasing rate in accordance with the growth of the main reference indicators, employment and inflation. Now a high probability of monetary policy will be tightening after the June meeting.
At the Asian session, the dollar continued the correction which was started last week. It was consequence of Williams words on the background of positive macroeconomic statistics published on Friday, and another ballistic missile test of North Korea was made at the weekend that increased the overall political tensions.
On Friday, the US indices were looking quite cheerful, and showed, basically, near-zero momentum, in spite of the fact that some investors were covering long positions and reducing risks before the long weekend.
Last week OPEC+ countries came to the agreement to extend the pact of the oil offer reduction by 1.8 million barrels per day before the end of the first quarter of 2018. But market participants have been waiting for more. As the result, it was possible to see the correction of growth which has been on inflated expectations from the hydrocarbons market. Now, when the parties to the Vienna agreement did everything they could, the main source of news, which investors will be watched, will be the inventories and activity of the shale producers. Today in the Asian session, oil prices continued the correction due to the growth in the number of drilling rigs, as reported by Baker Hughes on Friday.
Sincerely, Global FX chief analyst Sergey Melnikov.