On Friday, the last trading session of the previous week, stock indices traded with low volatility without a single direction. According to the trading results Dow Jones closed with a decline of 0.04% (22349.59), S&P 500 added 0.06% (2502.22), the Nasdaq rose by 0.07% (6426.92). European markets also have not shown uniform dynamics and closed mixed. The German DAX slid 0.06% (12592.35), British FTSE 100 rose 0.64% (7310.64).
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 08:35 MSK the President of the Bank of Japan Governor Haruhiko Kuroda speaks
At 10:00 MSK the Statement by the member of the ECB, Constancio
At 11:00 MSK the Index of business expectations of Germany in September
At 11:00 MSK the Assessment of the current situation in Germany in September
At 11:00 MSK the Index of business climate IFO of Germany for September
At 15:30 MSK FOMC member Dudley speaks
At 16:00 MSK ECB President Draghi speaks
At 17:45 MSK the Speech of ECB member, Coeure
On Friday, an important factor of influence on the markets was geopolitics. In response to threats of an American President "completely destroy" North Korea, this country announced plans to test a hydrogen bomb. This verbal sparring has already developed some immunity of traders, but, nevertheless, threats remain, and in the case of real tests it may bring to damage to the environment and cause natural disasters. As a result this may facilitate a correction by 2-3% of the world markets.
In addition to geopolitics, anticipation of the upcoming election in Germany influenced the markets, which forced traders to close part of positions, and the indices began to be consolidated. Today it is already possible to evaluate the results. Allies of the incumbent chancellor Merkel "Christian democratic Union and Christian social Union" have got the most votes, 32.5 %, becoming the largest group in the Parliament. Although the proportion has declined, but it is still more than it was assumed in the projections. Today investors will consider this event, and it is likely to expect the resumption of growth of the DAX.
In America there is a clash of conflicting factors that does not allow the markets to determine the direction. According to data from Markit preliminary index of business activity in the industry increased to 53.0. While a similar indicator in the services sector fell to 55.1 points contrary to expectations of 55.7. In addition to that geopolitics puts pressure to markets, as well as new problems in the Senate which related to vote for the draft health insurance.
During the week the price of gold declined for 2.1%, although the investment attractiveness as a protective asset was not lost because of new tensions between the US and North Korea. It is likely that in the near future the growth will continue.
Last week the price of oil reached their highest level since the spring of this year. OPEC+ rates highly the effectiveness of the agreement for the reduction of supply, which has already begun to bring the results. On Friday BakerHughes reported about a decline in the number of drilling rigs operating in the U.S. for 5. The behaviors of the indicator will happy buyers, as it has been falling for the third consecutive week. As the results this week, black gold added 1.5%, and what is very important it has been broken the downtrend that started in February.
Sincerely, Global FX chief analyst Sergey Melnikov.