On the first day of this week there was not observed single dynamics in the stock markets of America, and the major stock indexes ended the session in different directions. The Dow Jones fell by 0.10% (20881.48), S&P 500 rose 0.04% (2373.47), the Nasdaq rose by 0.24% (5875.78). European markets closed in positive territory, showing a single dynamics. The German DAX rose 0.22% (11990.03), British FTSE 100 down 0.33% (7367.08).
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 13:00 MSK the ZEW economic sentiment Index in Germany in March
At 13:00 MSK the Volume of industrial production in the Eurozone in January
At 13:00 MSK the economic sentiment Index ZEW in Eurozone
At 14:00 MSK Monthly report of OPEC
At 15:30 MSK Base the producer price index (PPI) of America for February
At 15:30 MSK the producer price Index (PPI) of America for February
Yesterday there were no publications of important macroeconomic data in the USA. Markets of the New world took a break, there were sideways movement with low volatility in anticipation of starting meeting of the Federal reserve in Tuesday. Next day, on Wednesday it will be published decisions on monetary policy and the new size of the refinancing rate. Now there is no doubt among the investors that the decision for a rate will be made, it has been repeatedly confirmed by the positive data from the labor market, hints of the FOMC representatives, as well as a tool from CME Group FedWatch, which is now above 90%.
Despite the importance of the event, the market is unlikely to react to it by increasing of volatility, this scenario has been already incorporated in the prices of the assets. The main value for market participants will be comments from Janet Yellen about the future actions to change monetary policy. In accordance with the latest announcement of the fed's plans in December, the regulator intends to raise rate at least three times this year. And at the moment the likelihood that this will happen next time in June is 86%.
The shares of the banking sector, as well as gold will be the main financial instruments that more then other will react for the tightening policy. Banks are expecting an increase in turnover and profit, and, respectively, the growth of capitalization, as it can be seen during previous months. Promise of the new President to reduce government regulation will add fuel to the growth. All is contrary for the gold, the yellow metal loses its protective function, transferring it government bonds whose yield may increase in the near future.
The oil market is experiencing not the best times. Although the fall did not continued yesterday, the rumors that the Vienna agreement will not be renewed until the end of the year did not add optimism to buyers. Today, market participants will monitor the monthly report of OPEC, perhaps they will hear positive notes that will help the oil to adjust the recent collapse.
Sincerely, Global FX chief analyst Sergey Melnikov.