On Thursday, the stock indices showed a decline. The Dow Jones fell by 0.24% (22359.23), the S&P 500 index decreased by 0.30% (2500.60), the Nasdaq declined 0.52% (6422.69). European markets showed no single dynamics and closed mixed. Germany's DAX rose 0.25% (12600.03), British FTSE 100 dipped 0.11% (7263.90).
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 Speech by ECB member, Coeure
At 10:30 MSK the Index of business activity in Germany's manufacturing sector for September
At 11:00 MSK Composite index of business activity in the Eurozone from Markit for September
At 11:00 MSK the ECB President Draghi speaks
At 12:30 MSK ECB President Draghi speaks
At 13:00 MSK FOMC member Williams speaks
At 14:15 MSK speech by a member of the ECB, Constancio
At 15:30 MSK the Basic index of consumer prices for August
At 16:30 MSK FOMC member George speaks
At 16:45 MSK the Index of business activity in the U.S. manufacturing sector in September
At 20:00 MSK the Number of drilling rigs from Baker Hughes
At 20:30 MSK FOMC member Kaplan speaks
At 22:00 MSK the Prime Minister May speaks
Despite opening with a gap down, the indices of the Old World managed to grow to the end of the session, it was contributed to the decline of European bonds. Also according to the preliminary data of the European Commission consumer confidence index for the Eurozone economy grew by 0.3 to level to 1.2 points in September. It is better than the expected zero change, and this figure is the highest since the beginning of 2001. The Bank of Japan kept its key interest rate at its previous level of -0.1%, which was a totally expected event.
American market after the recent rally started the consolidation. The fed's decision was expected by most experts, the refinancing rate was left unchanged in range of 1,00 – 1,25%. Also it was changed the assessment of the hike likelihood to the end of the year, it is now about 65%, and the next rate hike can happen in December. Most likely, investors ' confidence in this event will increase closer to the end of the year, and it will also be included to the price. The dollar may get the pause in decline. The reduction of assets on the fed's balance sheet starts from the first of October. This was also quite expected, thanks to statements of representatives of the regulator made in the previous months and also it was included to the price.
Therefore, the market reaction was not as bright. After the rally, which lasted for the couple of previous weeks, the index of wide market S&P 500 moved to the consolidation, above the key level of 2,500 points, which he reached after decline yesterday. From macro statistics it is better to note the number of initial applications for unemployment benefits, which fell to 259 thousand, while the projected 300 thousand. Such data could further push up the probability of increasing the key rate.
Oil production in the Gulf of Mexico almost recovered after hurricanes. It was demonstrated by the publication of data from the US Department of Energy, they showed production growth for 157 thousand barrels a day. The boost for of oil price growth was the report of the technical Committee of OPEC about the effectiveness of the implementation of the Vienna agreement for 99%. Last month this figure was 94%. The price of oil WTI has now broken the downtrend which has its beginning from January of this year and it will probably continue to move after consolidating at the level 50,75.
Sincerely, Global FX chief analyst Sergey Melnikov.