The US markets shrugged off some of their losses last night and was able to push the indices in the positive territory. However, a similar enthusiasm is failing to inspire the traders this morning because the European markets are still haunted by the valuation curse. To make matters more difficult for the bulls, we also have the geopolitical tensions between Russia and Ukraine resurfacing and a Déjà vue could take place.
So, it appears that the odds are stacked in favour of a further sell off than a relief rally, as we are trading near the flat line. If the US markets have not recovered yesterday, then we were close enough to be flat for this year so far and the cocktail of the above uncertainties could push back the bulls in their corner today.
The economic docket does have some firecrackers for investors today. We will kick off with the trade balance data for the UK and Germany first. After a smashing release of the UK’s manufacturing and industrial production data yesterday, the bar is set a little low today and the forecast is for a deficit of 9.3 billion pounds, but given the significant improvement in the economic activities of the country, we are expecting a better reading for this. On the other hand, the forecast for Germany is for a surplus of 17.9 billion euros, which looks odd, given that the country is exporting more than its imports and the overall economy is not thriving either.
Having said that, the FOMC meeting will steal the show today and traders are going to gauge the “interest rate hike -the six month time frame” phrase and see what other colour Janet Yellen can fill in to tone down this painting. She has assured the markets last week that the Fed will stay accommodative as long as it takes and we think she is going to stay consistent in delivering the same message today.
Disclosure & Disclaimer:
The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader. by Naeem Aslam