Review of May 18-22, new hopes stock market. Forecast for the week 25 – 29 May

By | May 24, 2015

Stock markets were able to resume growth. Most of finance completed a week in “green“. The main factor of support for the index once again confirmed that the Fed will not rush to increase rates, and the European Central Bank may even expand the program of asset purchases. But the US indices are in the area and highs, which hinders their growth. As a result, NASDAQ grew by only 0.82%, while the Dow Jones ended the week virtually unchanged. The German DAX 30 (FDAX) rose by 3.17%. Hong Kong HSI added 1.44% in the hope of further stimulus measures after the Chinese data reflect that the manufacturing sector is still in the zone of recession.

EUR / USD finished the week with losses of 3.8%, down to the level of 1.1011. No fundamental reasons for the growth of the euro. Published macroeconomic are mixed statistics, Greece’s problems are still not solved and the European Central Bank continues the program of quantitative easing.

Precious metals in the week showed a fall, despite the fact that the head of the US Federal Reserve signaled that the rate is unlikely to increase before the end of 2015. Gold fell by 1.47%. Silver lost 2.29%. Brent crude oil fell by 2.08%.

eur usd chart
EUR USD chart

Forecast for the week 25 – 29 May

Stock market
This week the market is waiting for a lot of interesting reports that are of particular importance, especially since Janet Yellen has once again confirmed the possibility of the Fed rate increase later this year provided that the US economic indicators improve. Attention should be paid to data on orders for durable goods, a report on consumer confidence from the Conference Board, as well as an updated report on the pace of US economic growth in the 1st quarter. Even the slightest sign of weakness of the US economy could strengthen expectations that before December monetary policy tightening can be expected. But US finances are near the maxima and to continue to grow, they will need significant catalysts, for example, a stronger decrease in the revision of Q1 GDP than expected. Therefore, the US indices still with a fairly high degree of probability can develop a downward correction. Dow Jones may revert to the level 18067. Nasdaq to the level 4477.0.

Talks on the Greek question again deadlocked. On Friday, they were suspended without any significant progress. A time in Athens is running out. The following payments of $ 1.5 billion coming in June. And it means that Greece may have to make concessions. Signs that the situation will still be resolved could support the German index DAX30. The result may be an growth of to ​​level 11980 and further to 12220. Moreover, the representatives of the European Central Bank made it clear that in the month or two the volume of the quantitative easing program may be increased, and Mario Draghi said on Friday that the reforms increase economic growth and its sustainability.

Market of raw materials
Brent crude oil continues to be kept within the range of 64.00 – 69.60, tending to its bottom. Most likely, a significant change in the situation did not happen in the coming week as the main factors that influence the dynamics of the black gold negate each other. As before, act to support asset standby reductions in production in the United States. Especially because in the US there has been a downward trend in the volume of commercial stocks (for three weeks in a row fixed drop indicator), and increasing refinery processing. And continuation of this trend could push up the quotations. But fears that at the June summit of OPEC, the cartel would not cut production quotas will not allow quotes black gold to show growth above the level of 69.60. Also, do not forget that the breakthrough quotations above $ 70 a barrel and hold above that barrier for a long time can lead to the unfolding of dormant projects on shale oil. Such concerns may increase as the number of working oil rigs according to Baker Hughes for the week fell by only on 1. It is not currently existing range of fluctuations of the best looks.

Despite the fact that gold is fails to develop strong growth, but there are chances of such dynamics. Pretty much precious metal reacts to the expectations of the US Federal Reserve monetary policy. Last comments the head of the Federal Reserve, as well as macroeconomic data, signaling that the US recovery is not fast enough to ensure that the regulator could go for a rate hike in the near future may become a catalyst for growth. Suffice it to data on orders for durable goods, consumer confidence and revised Q1 GDP came out worse than expected, the precious metal to renewed movement of level to ​​1213.97 level with a further target of level to 1225.55 dollars per troy ounce.

Currency market
This week the Bank of Canada will announce a decision on monetary policy. If the regulator will keep rates unchanged, will not make significant changes in the accompanying statement, hinting at a possible easing of monetary policy (which is still not possible, because the price pressure is reduced), and will not see new risks for the economy and the price of oil will not fall below the level of $ 60, the Canadian dollar could demonstrate the growth in relation to its US counterpart. Moreover, at this stage, temporarily lost USD main supporting factor in expectations of rate hikes already at the June meeting. Against this background, does not rule out a return pair USD / CAD at 1.1920 support area with a further target at 1.1800 in case of breach.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for informational purposes and do not guarantee the results obtained.

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