06.06.2014 - Markets reacted differently to the ECB decision
Major U.S. stock indexes finished yesterday's trading session with growth amid the ECB taking additional measures to deal with low inflation. Thus, the deposit interest rate has become negative and made -0.1%, while credit rate fell by 0.35% to 0.4%. Growth of initial unemployment claims did not change the mood of investors, because the indicator, despite the increase to 312 thousand, is near the minimum values for 7 years. Today we should pay special attention to the unemployment rate and non-farm payrolls in the U.S. (12:30 GMT). We expect the start of correction on the stock markets of America and save the medium and long negative outlook.
European stock indexes ended the trading session with different directions, despite the statement of the ECB on rate cut and the start of the program LTRO for 400 billion to support the real economy and to fight against low inflation. Positive for the euro area were also the news on the growth of retail sales in April by 0.4% vs. expected 0.1%. Today, the course of trading may be affected by data on trade balance of Germany, which surplus in April rose to 17.7 billion, that is 2.6 billion better than forecast and the same indicator in the UK (8:30 GMT). It should be noted that industrial production in Germany rose in April by only by 0.2% vs. the forecast of 0.4% growth. We expect continued growth of stock markets in Europe in the medium term, but keep a long-term negative outlook.
Markets in the Asia-Pacific region have slightly changed. On the one hand, investors positively assessed the ECB steps to fight low inflation, but on the other traders still fear crisis in the construction sector in China. The Japanese market fell against the strengthening of the yen, and the Australian was supported by rising shares of gold mining companies. Investors decided not to accumulate positions before the weekend, and a rise in volatility is expected on Monday after the release of a large block of statistics in Japan. We expect the decline in Chinese and Australian market, but forecast the growth of Japanese equities.