Today (April 29th) in the morning, the world's main stock indices still seem to be climbing up. As a consequence of the increases, they mostly reach the bearish gap which appeared in March after the severance of talks between Russia and Saudi Arabia, which led to the collapse of OPEC+ and a massive meltdown on the oil market. Nowadays, the bearish gap may be a potential area of resistance.
Futures contracts in the United States are rising from 0.7 to 1.2%, and the season of quarterly earnings results of American companies is still ongoing. Consensus on profits was so low that again the results are better than expected, but this is normal for the American stock market, even during an epidemic.
In Europe, stock markets opened up mostly slightly higher on Wednesday, as some European countries began to gradually lift blockades and restrictions caused by the coronavirus epidemic. In Spain, Prime Minister Pedro Sanchez plans to lift most of the restrictions in everyday life and return to a "new normality" within the next eight weeks, while in France, Prime Minister Edouard Philippe has announced the opening of shops from 11 May.
Investors are waiting for the outcome of the American Federal Reserve meeting. The decision on interest rates will be published today at 20:00, followed by a press conference by Fed President Jerome Powell at 20:30.
But it is not only the Fed that is paying attention today but also the publication of US GDP data for the first quarter. The US economy probably contracted in the first quarter at the fastest rate since the Great Recession of 100 years ago, as strict measures to slow the spread of coronavirus closed the economy, thus ending the longest period of expansion in the country's history.
According to Reuters data, the US GDP is likely to have fallen by 4.0% on a year-on-year basis in the last quarter, burdened by significant drops in consumer spending and falling inventories. This would be the sharpest GDP decline since the first quarter of 2009. The deepening slowdown in corporate investment was probably another important factor in the decline in the last quarter.
The data will be released at 2:30 p.m. and could have a potential impact on the US stock market indices and the dollar.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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