Stock market fails to get support from central banks this week

Posted 12 April, 2019

Asian stock indices show some decline at the end of the week. Investors, in their turn, are thinking over the recent hints for further development of the global economy as well as decisions by the central banks.

After the recent meeting of the European Central Bank, its Chairman Mario Draghi once again stated that risks for the euro-area economic growth are less significant. According to the results of the meeting, the Central Bank has decided to leave the interest rate unchanged this year.

Meanwhile, the US Federal Reserve in the released minutes of the March meeting did not hint any decline of the interest rate despite statements about possible both upward and downward revisions by some members of the US Fed.

It seems that the support for stock markets from the change of central banks' stance has faded away, though the S&P 500 is changing hands by 1.7% below an all-time low. Investors that expect lower rates may get nothing in the near term, so they should not relay that monetary policy would promote an upturn in stock prices.

As a result, investors may switch to seasonal reports now. With a weaker impact from lower taxes and state expenses in 2018, we should pay attention to companies' results. According to the available data, income dropped by 4.2% in Q1 2019. However, some upturn can happen if 65-70% reports are above the expectations of Wall Street's experts.

For now, investors should pay attention to one of the key factors – income margin especially given a faster increase in salaries in Q1.

The forecasts will be essential for the further movement of the S&P 500. In particular, the rate rose by 15.2 %, but if investors see stable growth, they will require confirmation that there will be no income recession in the future. The US Fed flexibility is not enough to fuel further upturn.

Previous forecast

16 April, 2019 17:00

← Euro to US dollar rate somewhat stabilizes after previous collapse

The euro-to-US dollar stays positive so far, but investors show restrained activity on Tuesday. For now, the exchange rate is near $1.1302. Meanwhile, statements by the US President Donald Trump keep putting pressure on China and the capital markets.

Euro to US dollar rate somewhat stabilizes after previous collapse

Next forecast

11 April, 2019 15:06

Euro somewhat stronger amid ECB meeting →

Euro was in the black during the morning trading on Thursday. In fact, the currency continued following the trajectory set yesterday after the European Central Bank meeting. The euro-to-US dollar exchange was highly volatile in the middle of the week, though the bulls eventually managed to take the lead. Wednesday was also marked by the regular meeting of the European Central Bank after which it was decided to leave the interest rate unchanged.

Euro somewhat stronger amid ECB meeting
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