Positive sentiment in the stock markets

12 March, 2018

On Friday, global equity markets were able to move to growth amid some improvement in market sentiment. European markets were under pressure for more than half a day, but by the start of the American session, indices were able to show positive dynamics amid expected data on the US labor market and some recovery in the oil market. The negative Friday moment was data on industrial production in Germany, which turned out to be weaker than the forecast consensus. (production: -0.1% m / m, exports: -0.5%).

US indices continued the growth and were able to show a strong Friday close, while the high-tech NASDAQ updated the historic maximum. Markets received support after the release of strong reporting data.

Overall, Friday was characterized by a gradual sentiment improvement in global markets, despite the introduction of tariffs on steel and aluminum by the US. Trump noted that countries that are "fairly treating US in trade issues" may be exempt from tariff increases (in particular, members of the NAFTA, Canada and Mexico).

It is characteristic that in US these measures have not been universally approved. It is reported that some US congressmen will try to counter tariffs at the legislative level. At the same time, a number of countries led by Europe and Japan have already resented such electoral measures, while China still remains silent. Amid the data on the American labor market the issue of trade wars is gradually receding into the background.

Data on the labor market in the US were positive: the number of new jobs in February was 313 thousand (consensus forecast +200 thousand), but the unemployment rate slightly increased (from 4.0% to 4.1%.) Labor market statistics allowed to slow down the further growth of inflation expectations in the US, and justify the upcoming Fed rate hike.

In the FOREX currency market, a new week begins at previous market levels. On Friday, after the release of US data and the growth of stock markets, USD dollar moved on to strengthening. EUR/USD retreated from local maximum levels of $ 1.2425, and declined lower to support area of ​​$ 1.2300- $ 1.2320. The situation on the chart is quite interesting. If the pair does not hold onto these balance levels, and will be pushed lower, we will soon see the levels of local minima $1.2190 (support zone of the medium-term channel 1.2190-1.2500)

GBP/USD could not gain a foothold above 1.39 - a negative medium-term signal. The pound remains under strong pressure due to the lack of progress in Brexit negotiations. The issues of the customs union, the single market, the borders of Northern Ireland, as well as the European court remain unresolved and in such a situation the pound will remain under pressure. The only question is what minimum will be indicated by the pair. On Monday, USD / JPY was under partial pressure, retreating from the highs of the previous week. The dynamics of global stock markets  still strongly influence the pair.

In general, positive sentiment in the stock markets persists, as the local strengthening of USD dollar can remain until tomorrow, when the data on inflation in the US come out. By the middle of the week, statistics will be the main market driver (the data unit for the PRC, retail sales in the US), and the approaching Fed meeting (March 20-21), markets are waiting for rate hikes and more hawkish rhetoric by official.

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