Yesterday, equity markets have not shown significant dynamics compared to the previous days. Nevertheless, the whole day ended positively - investors refrained from corrective action. The technical factors start to affect the markets: above all - the overbought US indexes and proximity to historic highs. The possible reversal of US dollar to uptrend is a negative factor for US equities. In addition, news on the protectionist measures against Mexico were accepted warily by markets. At the same time, corporate reporting season in the US continues to deliver good results. Market sentiment deteriorated somewhat as a result of the controversial US economic data.
Data from the US labor market was worse than expected, the number of initial claims for unemployment benefits amounted 259,000, the forecast was 247,000.
The Commerce Department reported that sales of new homes in the US fell by 10.4% seasonally adjusted, reaching a 10-month low in December, after three months of stable growth and reached 536,000, the forecast was 588,000.
At the same time, the business activity index (PMI) in the US services sector showed growth in January, rising to a level of 55.1, higher than expectations of 54.4.
Today, European stock indices traded in the red. Investors fixated some income despite US indices being close to historic highs, along with the Fed meeting next week. US indices futures traded in neutral.
Brent oil market gained in the area of the upper level of the medium-term range. The oil market receives some support from OPEC representatives’ verbal interventions. Bouterfa said that the 1.8 million bpd cut target agreed between OPEC and non-OPEC producers will be achieved in February. Today, markets will focus on number of drilling rigs in the US oil market. We can expect profit taking in the oil market by the end of the trading day.
On Thursday, the market sentiment deteriorated amid some protectionist actions of the new US administration and also new home sales data. The markets are concentrating on the major events of the next week: the meeting of the American regulator and relevant comments. We expect the development of local correction on the stock markets before the weekend. Today, the focus is on US GDP data for the 4th quarter.