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Equities are under pressure, US inflation data eyed

In the middle of the week in equities markets remains negative sentiment. The main index of the American market SP 500 failed to overcome the important resistance zone around 2800 points and rolled back to the area of 2720 points, so the SP 500 lost 3% in three days. After such market dynamic, no need to talk about the return of positive trends in the US market. In addition to the strengthening of the US dollar (the dollar index returned to the highs of 2017), another strategic market tendency of recent days is the decline in oil prices. Brent crude oil adjusted from the highs of early October by about 25%. On this background, oil and gas companies are under strong pressure in global markets, which also has an impact on the American market. The gold market has declined down to the $ 1,200 strategic level.

On FOREX, the local pullback of the US dollar ended with a new growth impulse. Yesterday, the dollar index adjusted from the maximum levels around 97.50 points, but the decline stopped in the area of first support 96.85. Italian Economy Minister Giovanni Tria sent an official letter to the European Commission stating that the government does not intend to revise the draft budget for 2019. According to the minister, the draft budget with a deficit of 2.4% will help carry out a number of important social programs aimed at supporting the population and leaving the country out of a difficult economic situation. At the same time, Tria, in his letter, noted a number of measures that, in his opinion, would help the country reduce the public debt by 2021 from 132.2% of GDP to 126%. Further development of this conflict will increase the pressure on the European currency.

Amid the internal political problems in the EU, the economic situation is gradually deteriorating as well. The preliminary GDP data published today confirmed the forecasts of many experts about a gradual slowdown in economic growth in the leading EU economy. According to published data, German GDP grew by 1.1% over the year, against the expected growth of 1.3%. The decline for the quarter was 0.2%, with an expected decline of 0.3%. For the EU as a whole, the situation is as follows: GDP q / q 0.2%, with a forecast of 0.2%, GDP y / y 1.7% with the same forecast. The volume of industrial production for the month decreased by 0.3% with an expected decline of 0.4%.

The European currency corrected to the area of 1.1300. The British Pound is trading volatile within the range of 1.2915-1.3000. Futures on US markets are trading in the red, European stock exchanges are also under pressure. Today, the global focus on upon data on US inflation. According to forecasts, the annual baseline should remain at 2.2%, while the growth rate for the month should accelerate from 0.1% to 0.2%. The data above or at the level of the forecast can provide strong support to the dollar.

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