Fundamental analytics

The new week will be full of important data, we expect a change in equity market sentiment and a rebound after recent decline

On Friday, the decline in European markets continued amid a general decline in risk appetite and the possibility of another government shutdown in the US. In USA, most of Friday trading session market declined, but by the close of trading, the indices went into a positive zone, and finally managed to display gains for 1.4% -1.5%. The price action was encouraging. The indices dropped to new lows before starting a strong recovery and closing trades near session highs. The S & P 500 index approached the 200-day moving average, which often provided support in this long-term bull market after medium-term, but still local correction (-10% of the maximum). The positive closing of the week is in itself a good signal and it is possible that the period of increased volatility is left behind.

It should be noted that the corrective mood in the markets began to weaken by the end of the week, technically the stock markets (primarily American ones) look strongly oversold and need an upswing. Improvement of market sentiment occurred on Friday after the resumption of US government financing and cheaper equities. At the same time, the yields of bonds in developed markets remain at high levels, reflecting fears of an increase in the inflationary background and tightening of the policies of the leading CBs. The coming week will be rich in news and statistics. First of all, the focus will be on US and European inflation data, retail sales figures and industrial production in the US (Wednesday and Thursday), and finally the GDP estimate and the euro zone trade balance, as well as data on the housing market in the US and the Michigan index.

Near the end of the week, the Lunar New Year will be held, which will be the beginning of a long weekend in Asia and, as a result, will lead to a decrease in trading activity in the markets.

On FOREX, a new week begins with restraint dynamics amid reduced trading activity. The main pair of FX market EUR / USD today opened a week near the level of EUR1.2267. Bulls attempts to test the round level of EUR1.2300 have not yet led to a serious level assault and produced pullbacks. However, the situation on the pair has changed - first of all the level 1.2200-1.2185 has proved to be strong, which allows us to conclude that in the near future we will see a real storm of 1.2300 with an attempt to recovery back  the EUR1.2370 zone.