The stock markets are concerned about the negative signals for the world economy
The markets continue to win back idea of the imminent decline in interest rates in the United States and a potential easing of monetary policy of Central banks of key countries. Cautious attitude of the Bank has the visible support for the stock indexes and returns demand for emerging-market currencies and raw materials. Despite the concern, Powell’s atmosphere, business environment and weak statements of some large companies, the US economy continues to deliver strong data, calling into question the need for urgent resuscitation of position through reduction of interest rates until the end of July.
So, data released yesterday on consumer inflation exceeded analysts ‘ expectations. The annual growth rate of core CPI rose to 2.1%, which corresponds to a healthy growth rate of prices. In a similar situation in years past the fed on the contrary, actively raise rates, not reduced it.
Weekly applications for unemployment benefits falling for the third straight week, returning to levels close to 200 thousand.
Warning signals in the economy exist, of course. However, emergency intervention will vygljadjat as excessive concern than do a required action, because risks to result in the overheating of the economy.
The stock market
All three key U.S. index – Nasdaq, SP500, Dow Jones updated the historical highs yesterday. On the one hand, one hears doubts about the sustainability of the stock market on the background of trade conflicts and the deterioration of the statements of some companies, and on the other – this “fragile” the market continues to set records.
The single currency ended a downward trend since the beginning of the month and turned to growth by lowering interest rates on dollar-denominated debt markets. Strong data on the same CPI yesterday threw EURUSD is about 40 points down from levels near 1.1280. However, the positive mood of investors returned to buy on the EURUSD.
Today you should pay attention to the data on producer prices in the United States. The actual value can be be a good barometer of future inflation rates.
The rate of oil
Prices on U.S. crude oil this week it is back above $ 60 per barrel. The growth stands as the overall demand for risky assets, and news about the fall of stocks. This is another sign of the normal state of the American economy. From the technical analysis, you should pay attention to the fact that WTI quickly recovered from the reduction and re-testing the area of the bull market. Growth of 20% from local minima formally passes through 60.80 against the current levels 60.70. A move above may further attract buyers.
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