Yesterday, the first trading session of this week, the stock indices showed a single strong downward trend and closed in negative territory. The Dow Jones fell by 1.07%(21753.31), the S&P 500 index dipped by 0.76% (2457.85), the Nasdaq fell 0.93%(6375.57). European markets have not shown single dynamics. Germany's DAX rose 0.18% (12123.71), British FTSE 100 fell 0.52% (7372.92).
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 02:00 MSK FOMC member Kaplan speaks
At 04:30 MSK Australia's GDP for the second quarter
At 09:00 MSK factory orders in Germany for July
At 15:30 MSK trade balance of the U.S. in July
At 15:30 MSK the Productivity of Canada for the second quarter
At 16:45 MSK the Index of business activity in the U.S. services sector in August
At 17:00 MSK the Index of employment in the non-manufacturing sector of US for August
At 17:00 MSK the Index of business activity in the nonmanufacturing sector from ISM for August
At 17:00 MSK statement by bank of Canada
At 17:00 MSK interest rate decision for Canada
At 21:00 MSK Beige book of fed
At 23:35 MSK Weekly crude oil inventories according to the American petroleum Institute (API)
After the open with growth, the European stock markets went into a correction by the end of the trading session. The main pressure was directed to the financial and telecommunication sectors. The reason of this was the negative statistics, and it could delay further steps to tighten monetary policy of the ECB, which can be announced at the meeting on Thursday. The index of business activity in the service sector of the Eurozone was 54.7, which is lower than the previous value and the forecast of 54.9. The composite index of business activity has remained unchanged at 55,7, at the time, as expected and 55.8. Also retail sales in the Eurozone in July decreased by 0.3%, and it are stronger than the expected 0.2%.
The situation is even worse on US exchanges. After a weekend that lasted another day because of Labour Day, as expected, the session opened with a strong gap down after the decline continued. The main reason was the escalation of geopolitical tensions around North Korea. And this factor will continue to play an important role for some time in future. It became known that the DPRK is going to make another rocket launch from the West coast. Intercontinental ballistic missile has the capability to reach the U.S. mainland. According to intelligence the South Korean launch could take place on 9 September, the anniversary of the founding of the DPRK. Also the statistic data is not encouraging investors. The volume of industrial orders has fallen to 3.3%, although this was in line with expectations.
Yesterday sharp rise of oil was caused by the news about the amount of damage from the hurricane "Harvey" which is 180 billion. Also it was increased the demand due to the recovery of refinery infrastructure, which goes faster than the production. Now just over 11% of the refineries put out of action, despite the fact that last week it was 25%. The determining factor for players in the energy market may be the publication of US inventories change this week. The first data from the American petroleum Institute (API) will be published tonight.
Sincerely, Global FX chief analyst Sergey Melnikov