19.05.2016 - The probability of a significant fall in the markets has increased
American stock indexes ended the trading session with a slight change. On investor sentiment negatively influenced the previous Fed meeting minutes, after the publication of which increased the likelihood of the Fed raising interest rates. Thus, in case of further improvement in the US labor market and rising inflation, which in April rose by 0.4%, the Fed may decide to tighten monetary policy. In addition, the negative impact on the course of trading had a decrease in oil prices due to the rise in US inventories by 1.3 million barrels. Today, the course of trading may affect the data on the manufacturing PMI of Philadelphia (12:30 GMT) and the speech of the deputy head of the Federal Reserve Stanley Fischer (13:15 GMT). Our forecast for next weeks remains negative and its probability has greatly increased.
European stocks today show a steady decline against the background of the negative impact of yesterday's publication of the previous Fed meeting minutes which resulted in the increased likelihood of higher interest rates in the US in June, which will be negatively displayed on the stock markets. Support for the UK market was the news about the growth of retail sales in the country by 1.3% in April, against the forecast of 0.6%. In addition, according to opinion polls, about 55% of voters are ready to vote against the UK’s exit from the EU, the situation on the European markets in the near future will depend heavily on investor sentiment in the United States. Our medium-term outlook remains positive, but the fall is likely to continue in the near future.
Most markets in the Asia-Pacific region showed a decline against the background of the negative impact on the growth of the probability of the Fed raising interest rates in June. At the same time Japanese market showed minimal growth, due to the weakening of the yen, which traditionally has a positive effect on the country's stock market. It is worth noting that the volume of domestic orders for engineering products with the exception of the vessels and municipal equipment in Japan rose by 5.5% in March, after falling 9.2% in February. In Australia has been published positive data on the unemployment rate, which remained at around 5.7%, which is 0.1% better than expected. The decline in commodity prices will put pressure on the Australian assets in the near future. We expect growth in the medium term, but expect a drop of indexes in the region in the coming weeks.