US indices retreat after ECB didn’t cut rates
The SPX500 index touched a record high yesterday but then retreated, echoing weakness across the other indices. The slight pessimism crept in after the ECB chose not to cut rates yesterday.
US30USD Daily Chart
The US30 index fell for a second day yesterday, despite strong economic data and some OK earnings reports
The 100-day moving average at 26,215 and the 55-day average at 26,315 continue to track each other higher
US economic growth probably slowed to 1.8% y/y in the second quarter, according to the latest survey of economists. That’s a marked slowdown from Q1’s +3.1%.
DE30EUR Daily Chart
The Germany30 slumped the most since May 13 after the ECB opted not to cut rates. An economic outlook that is getting “worse and worse” and an increased likelihood of additional stimulus were not enough to stop the decline
The index is falling toward the 55-day moving average at 12,222, which has supported prices on a closing basis since June 3
In the post-meeting press conference, Bank chief Draghi said that cutting rates had not been discussed, but added that he sees EU rates at present or lower levels through to at least the first half of next year, or as long as necessary.
CN50USD Daily Chart
The China50 index advanced for a third consecutive day yesterday, helped along by the prospect of progress in US-China trade negotiations on Monday
Th 55-day moving average at 13,185 has turned higher this week and looks poised to cross back above the 100-day moving average at 13,214 early next week
Markets will start to focus on the July PMI readings next week, which are scheduled to be released on Wednesday. Contrary to the softer flash Markit manufacturing PMI readings from around the globe, China’s PMI is seen rising to 54.4 from 54.2 in June. One could argue that there is a risk of a lower number, which would be detrimental to risk appetite.
