The S&P500 climbed to 874,6 points, close to local peaks from late January and early February. This also means that the correction which started on 6th March just matched a similar move dated on 21st November – 6th January, which means a nearly identical correction in terms of both points and dates. This means that we have just achieved a perfect moment for a correction, which should also cause a selloff on emerging currencies and industrial commodities. On the other hand, a decisive rise beyond these levels opens a path towards this year’s maximum at 940,7 pts.
If the data is about to decide, investors will focus on earnings reports rather than macroeconomic releases. This week is full of report releases with such names as Bank of America and Texas Instruments (today), Blackrock, Caterpillar, Lockheed Martin, Merck, United Technologies and Yahoo (tomorrow), Apple, AT&T, GlaxoSmtihKline, McDonald’s, Wells Fargo and Morgan Stanley (Wednesday), American Express, ConocoPhillips, Credit Suisse, Microsoft, PepsiCo and US Airways (Thursday) Ford, Nomura and Xerox (Friday). Among macroeconomic data it is worth to mention US home sales (used on Thursday, new on Friday), US durable orders (Friday) and Germany’s Ifo index (Friday).
These corrective moods go along with a continued slide on the EURUSD and a move downwards on USDJPY. While this seems justifiable, one needs to notice that the dollar was gaining against the euro already last week, while stocks were still going up. This is a negation of a previous positive correlation among EURUSD, USDJPY and major stock indices. This also means that the EURJPY, which is often mentioned as a barometer of a sentiment on the stock markets, lost nearly 9 figures in two weeks, while stock indices are still close to the top. On EURUSD, a return to levels observed before the last Fed’s decision opens a path to this year’s minimums. A possible combination of falling stocks and sliding EURUSD spells a selloff on emerging currencies (where the Polish zloty, Mexican peso and South Korean won were the leaders of a bull market) and industrial metals (like copper and zinc).
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Przemyslaw Kwiecien  |
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