US markets had another blockbuster day yesterday and the stock market closed higher with a gain of nearly one percent. The sectors which were responsible for pushing the markets higher were healthcare and energy. The Dow Jones index was also wearing the green blanket and firmly in a positive territory for 2015. The S&P500 and the Nasdaq were already leading the way for this year and the S&P index was able to break the resistance of 2100 for the first time yesterday since August this year.
However, the rally in the US, so far has been able to produce a strong positive sentiment across Asia as most of the indices are trading firmly in a positive territory. Most of the focus was towards the Royal bank of Australia’s rate decision and no change in interest rate was announced. The chances were bleak to start with that the RBA will cut rates and the next opportunity for them will be in December now. The Aussie dollar plunged against the dollar after the bank’s decision. The lower inflation level is unquestionably a headache for the bank along with abate import activity from China.
Back in Europe, the focus will be on two different elements. Firstly, what we have is the Spanish unemployment change data and the forecast is for 70.3K while the previous reading was at 26.1K. Finally, this week we have two speeches by the president of the ECB- Mario Draghi. If we recap from what he said during his press conference last month in Malta, one prominent element is in the economic data which is baking a positive sentiment for the Eurozone growth. The data without any doubt has printed more strut reading and one of the ECB goal was achieved without lifting a finger- thanks to the Fed’s hawkish statement who are set to raise interest rate in December or at the very least they have anchored the market expectations and this has pushed the euro lower.
Mr Draghi will be speaking at the European cultural day today and tomorrow at the banking conference. Finally on Thursday at an event in a school based in Milan. Investors will be focusing on his dovish stance and if the bank is still determined to add more stimulus in December. If he maintains his view and furnish the market with more dovish talk, we could see more wellness for the euro.
As for the UK, all eyes will be towards the upcoming inflation report and the Bank of England’s rate hike decision, which is due on Thursday. The data, which will anchor those expectations will be the construction PMI due today and the services PMI number for tomorrow. The PMI manufacturing data released on Monday was certainly bullish however, the BOE will also pay close attention to inflation and consumer sentiment- the retail sales data will surely play its part here.