Stock markets have experienced is not the simplest week. The more aggressive than expected, the tone of the minutes of the April meeting of the US Federal Reserve put pressure on the indices. However, the last time they were still able to recover. As a result, Dow Jones closed almost unchanged (-0.02%). NASDAQ rose by 0.93%. The German DAX 30 added symbolic 0.16% to close the previous week. The growth leaders again broke Japanese Nikkey (NKD), which added 2.04% to the weakening yen. Hong Kong’s HSI, was also able to show growth of 1.4%.
Reporting of Wal-Mart (WNT) pleased investors. Earnings per share rose above forecasts ($ 0.98 against the expected $ 0.88). Quarterly revenue of $ 114.99 billion (+ 0.9% y / y), with an average forecast of $ 112.68 billion. Against this backdrop, shares of WMT jumped 7.83%, noting a maximum of 70.07. Continue to keep a positive attitude and actions nVidia (NVDA). Quotes reached the level of 44.30. Thus, an increase of 8.15%.
USD / JPY noted three-week high, rising to the level of 110.58. The Australian dollar, as expected, came under pressure, however, the key driver did not minutes of the meeting of the Reserve Bank of Australia and the weaker labor market data. AUD / USD lost 0.62%.
Despite the fact that in the second half of the week Brent was receding from earlier highs, following five days of working energy source showed an increase of 1.9%. Precious metals, on the background of the increased interest in dollar finished the week with losses. Gold (XAU / USD) has fallen in price by 1.69%. Silver (XAG / USD) fell by 3.37%.
Chart of the week:
The economic data of the last week:
- Monday. US March net long-term flows of the TIC $ 78.1 billion versus $ 36.5 billion forecast
- Tuesday. US April consumer price index (CPI) 0,4% against the forecast of 0.3%
- Wednesday. Minutes of the April FOMC meeting turned out to be more aggressive than expected. He reflected that the majority of participants considered probable rate hike in June
- Thursday. UK: April retail sales of 1.3%, 4.3% vs. 0.5%, 2.5%
- Friday. Canada: April CPI + 1.7% – in line with forecast
Forecast for the week on April 23 – April 27
The message received by the market on the part of the April meeting of the US Federal Reserve report proved disappointing for stock assets. I recall that the US regulator sounded very aggressive. Against this background, according to a bet on futures positions, the market began to be put on a rate hike at the meeting in June, with a probability of 30%. In July, the possibility of tightening already estimated above 50%. But if we talk about the state of the US economy, the latest reports do not indicate its indisputable health. As we approach a pretty important meeting of the Committee, is very closely monitor incoming macroeconomic statistics.
Next week it will be a report on orders for durable goods and revised data on the growth rate of the US economy in Q1. According to preliminary estimates, GDP growth was only 0.5% in annual terms, which was a minimum of 2 years. If the second evaluation confirms these figures will be revised or a fall, market expectations can change quickly, because in such a case is unlikely in June, the Fed will be able to raise. The natural reaction of US indices could be growth. Dow Jones (YM) in this case, may return to the level of 17700 area with a further target at 17830. NASDAQ (NQ) will aim towards 4435.0. In addition to the above mentioned reports, and attention should be paid to data on business activity in the industrial sector and the service sector by Markit and data on the US housing market.
Commodity and raw market
London Brent crude oil crept very close to the level of 50.00, noting the high at 49.81. It is possible that the source of energy still try to test the psychologically important barrier. The fact is that at this stage a number of oil-producing countries faced difficulties. In Canada, forest fires have led to the evacuation of about 800 thousand. Employees, and therefore restrict production. In Nigeria, the oil infrastructure under attack fighters, which reduced production to a minimum of 22 years old.
Local conflicts and limited supplies from Libya. But until the fall offers acquires a trend, continue to wait confident the upward trend in oil is probably not worth it. And this can hinder the fact that Iran continues to increase production, closer to its goal of 4 million barrels per day. Thus, while a relatively high probability we can assume that when approaching the mark of 50.00 for Brent, can begin profit taking, which will put pressure on short-term energy source. Moreover, at the current stage it is not at hand and oil plays a fairly high dollar.
On a fairly large block of European statistics will be published next week. Revised data on the index of business activity in the industrial and service sectors are unlikely to cause a resonance, if there is no strong deviations from the preliminary figures. But the final GDP data for Germany is still a certain noteworthy. If the report will be released at least 0.1% higher than the preliminary assessment, the pan-European currency may be supported. It may also be interested in data on business sentiment in Germany ZEW index of business optimism from the IFO. Growth rates will show an improvement the business community economic outlook of the country and indirectly confirm market expectations about the long period of inactivity on the part of the European Central Bank. Against this background, the EUR / USD may undertake attempt to return to the level of 1.1320. Above it worth the wait only in case of weak data from the US, which would negate the optimism of the dollar caused by the aggressive tone of the Fed‘s April report.
Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.