The downward pressure on equities

16 May, 2016

We highlighted on Friday the dilemma that currently faces equities and also US equities in particular. This was highlighted by the retail sales data on Friday, whereby firmer than expected failed to provide any uplift for equities. On the other side of the coin, it’s very hard for equities to get excited by weaker data, because there is no prospect of further QE from the Fed and very little chance it will flatten the already flat expectations for the Fed Funds rate this year. Bottom line, for the moment it’s difficult to see US equities pushing above the mid-April highs. The dollar was firmer on the release, on the basis that the near dead and buried Fed tightening expectations for June may just about have some life in them yet. The dollar has now returned to the range (on the dollar index) that dominated during April and is likely to be more range bound for the time being.

For this coming week, there are no key events for the majors that are likely to upset the current tone. Both the FOMC and ECB release the minutes to their latest policy decisions (Wed and Thu respectively) which will be scrutinised given that the policy bias is in opposing directions. Meanwhile, the BoJ continues to see its policy measures having limited effect on the currency, at least in the direction that it would require or anticipate. This is the new world that currencies find themselves in; central bank policy expectations not having the same impact as previously was the case. For today, activity is likely to be on the quite side, with no key data releases. Note that the Aussie has recovered a little from the weakness of the past few sessions, back towards the 0.73 level. Sterling a little softer as the Brexit headlines get ever louder.


Source link  
Risk Appetite Returns

North Korea official news agency reported on Monday that leader Kim Jong Un will watch the actions of the United States for a while longer before making a decision to fire missiles at Guam...

US-Korean Tensions Rattle Markets

Markets were cautious on Wednesday, as safe-haven assets pushed higher after tensions grew between the US and North Korea. Markets are concerned...

Global Manufacturing Grows

Recent data releases have shown that global manufacturing saw an increase in July, further confirming global economic momentum has carried into H2...


All Eyes on Central Banks

Markets were, for the most part, little changed on Wednesday as traders waited for today’s Bank of Japan and ECB rate decisions. Earlier today...

Dollar Bears

UK Consumer Price Index (CPI) data was released on Tuesday showing inflation easing for the first time in nearly 10 months, retreating from the near 4-year high touched in May...

More Record Highs for Equities?

Early indications from Asia this morning are pointing towards a strong day for global equities, continuing the momentum from last week...


US Data brings on USD bulls

U.S. job growth surged more than expected in June and employers increased hours for workers, with signs of a labor market strengthening that is likely...

Biggest Quarterly Drop in 7 Years

USD recovered marginally on Friday, but had its biggest quarterly decline against several currencies in nearly 7 years following hawkish signals...

Markets look to Central Bankers

Asian Equities traded higher on Tuesday approaching near two-year highs on Tuesday as USD strength helped exporters...

  


Share: