On Monday, pressure on world equity markets increased, American markets lost an average of 2%. Sales were observed across all sectors of the market, but high-tech sectors remain under strong pressure. Today futures for US indices are trying to return to the green, signaling that today we might see a technical rebound.
New month and quarter began with the deterioration of market sentiment. There are two main reasons for this - the development of the "trade issue" in a negative scenario - the trade and political tensions between the US and China are increasing. China's response assumes the further development of the conflict, the consistency of both sides makes us expect to launch a new portion of protectionist measures from the US and attempts to involve other countries in the anti-China campaign. At the same time, we should not expect China to limit itself to the measures it has taken. All this not only worsens the prospects for the development of the world economy against the background of a decline in the volume of world trade, but also exacerbates the global geopolitical situation as a whole. The second negative driver for the market is the corporate negative in high-tech sectors - on Monday the high-tech NASDAQ decreased by more than 2.5%.
For the FOREX currency market, a long weekend in Europe and the US did not affect the course of trading. Activity and liquidity of trades remained below average.
Yesterday, attention was forwarded to the PMI data of the US manufacturing sector, which were below the forecast and the level of the previous month, 59.3 versus 60.1 and 60.8 points, respectively. Today's data on the volume of German and PMI retail sales of German and EU manufacturing sectors has not yet had a big impact on the market. Both figures from Germany came out worse than expected, February retail sales came out negatively, this time -0.7% with the expected + 0.7%, PMI of the manufacturing sector 58.2 with a forecast of 58.4. PMI of the manufacturing sector in the EU as a whole has not changed compared to the level of last month 56.6 points.
In addition to the geopolitical factors there will be very plenty of interesting data from the information and statistical point of view. Tomorrow in Europe will be published important data on inflation. Experts predict a sharp increase in this indicator from the previous 1.1% to 1.4%, which, if confirmed, can provide strong support for the European currency.
In US on Wednesday ADP will publish data on the change in the number of employees, as well as data on the PMI of the US non-manufacturing sector. Thursday is expected to be relatively calm, as neither US nor Europe is expected to provide important economic reports, but the close of trading on Friday can be very volatile and interesting. Firstly, Non-Farm Payrolls will be published on this day, which practically guarantees high volatility in the market, secondly, by the evening of this day, the speech of Fed Chairman Jerome Powell is scheduled, which also can have a very strong influence on the course of trading. We are waiting for an interesting trading week ahead.