Yesterday, the European stock market attempted a correction. Based on the local recovery of the financial sector investors used speculations about the possible increase of support measures by the European regulator. Being near the support levels the US market tried to recover using the yesterday's speech of the Federal Reserves’ head Janet Yellen. By the end of the speech at the congress, the markets did not hear anything new. Along the strong labor market in the USA, the effect of the Chinese slowdown on the American economy becomes obvious. Yellen also confirmed the intention to follow the path of interest rate increase, however the nearest increase is unlikely, due to the turbulence of the financial markets. Nevertheless, the US market could not stabilize at the reached levels and at the end of the dayit was closed near the opening levels.
The oil market remained under pressure. Yesterday’s report on reserves was not the worst one in recent times, however this managed to change the overall tendency. Today, oil remains in the area of $30 per barrel. A strong support is placed at 30-30.30 matching the institutional demand. With the absence of the Chinese investors the oil market is traded with a clear low volatility. If this level stabilizes then there will be a reason to consider the resumption of oil strengthening tendency and a grow to $32.36 per barrel.
On the FOREX market, the turbulence dynamics of last week stayed same while trading. The US dollar is weakening against the European currency and the Japanese yen. The dollar is traded in a wide range versus commodity currencies.
The tension on the global market remained and the tendency of risk aversion is increasing. The safe assets are overbought and most indices are oversold. Under these conditions we tend to remember our January forecasts when indices started to grow after the crush in the first trading weeks of 2016. We said that the growth of stock indices is a correction before a larger-scale sell off on the market.
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