On the last trading day of previous week the stock indices showed a single increasing trend and closed in positive zone. The Dow Jones added 0.26% (21006.94), S&P 500 rose by 0.41% (2399.29), the Nasdaq rose by 0.42% (6100.76). European markets also closed in positive territory. The German DAX rose 0.55% (12716.89), British FTSE 100 down 0.68% (7297.43).
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 09:00 MSK factory orders in Germany for March
At 10:30 MSK the Index of housing prices from Halifax in the UK in April
At 15:15 MSK the Volume of construction of new homes in Canada in April
At 15:35 MSK FOMC member Bullard speaks
At 15:45 MSK FOMC member Mester speaks
Yesterday, the elections of the President of France were won by Emmanuel Macron with a good margin more than 60% of the vote. Such an outcome was more than satisfied for investors and market participants around the world. The election program of Makron is based on the continuation of the initiatives of the previous administration without any sudden movements and intentions to leave the EU as it was seen from his opponent's speeches in the second round Marine Le Pen. Despite this happy event, it is unlikely to see increasing volatility in stock and currency markets. The fact that after the first round of most investors foresaw the victory of Macron and changed the structure of their portfolios. Over the past two weeks it was possible to observe the rally in the markets. There were small gaps at the opening of trading on the Forex today. These gaps were closed after the first hours trading sessions. Most likely, in the next few days it will be a correction downward, due to expense of profit-taking of speculative positions in the absence of obvious upward momentum.
First, what do you expect from the new President of France, is a reform aimed at developing the economy and improving situation in the labour market. According to the macro statistics, the unemployment rate this year has reached 10%, which is higher than the average for the Eurozone.
Monthly data on the US labor market was published on Friday. The number of jobs in non-agricultural sectors has brought obvious positive news, demonstrating the increase of 211 thousand, which was higher than expected 185 thousand. This gave additional reasons for continued growth in the stock markets. As a result, major indexes approached historic highs.
Over the last few days of last week the price of a barrel of oil fell by more than 8%. Such a sharp downward movement caused by the growth of offer from Nigeria and Libya, as well as growth in US production. But on Friday there was also a noticeable rebound due to the confidence of investors in the renewal of the Vienna treaty of OPEC regarding production cuts until the end of the year. This decision can be made at the next meeting of the cartel on May 25. Today in early Asian session, the move up continued. Traders believe that the victory of Emmanuel Macron at the presidential elections in France raised hopes for a more stable European economy, which increases the likelihood of increased prices for oil.
Sincerely, Global FX chief analyst Sergey Melnikov.