Poor US GDP data weighs on market sentiment ahead of FOMC meeting

Wednesday, April 29, 2015

The sharp sell-off across the global equity markets continues as investors remain cautious ahead of the crucial US Federal Reserve meeting looking for further clarification regarding the timing of a possible interest rate rise in the second half of 2015. The US dollar came under renewed pressure in today’s session with the USD index dropping sharply below 95.0 and reaching a new three month low against a basket of currencies.

In Europe, the ongoing uncertainty regarding Greece’s debt issues continue to lurk in the background, causing nervous trading conditions. Eurozone’s economic confidence dropped to 103.7 in April compared to 103.9 in March while consumer confidence remained unchanged at -4.6 being in negative territory. The CAC, DAX, IBEX and London equity benchmark indices posted sharp losses today and declined between 1.2% and 3.2%.

DAX index retreats over 300 points 

DAX Index (Deutsche Boerse AG Ge 2015-04-29 15-50-55

In the US, the Dow Jones index slid lower towards 18,000 while the S&P 500 and NASDAQ retreated over 0.35% ahead of the US FOMC rate decision. Furthermore, we received disappointing US economic data as the US economy grew by 0.2% in Q1 2015 compared to a 2.2% growth rise in Q4 2014, missing analysts’ expectations of a 1% growth. Pending home sales increased by 1.1% m/m in March compared to a 3.1% rise in February.

USD index slides lower below 95.0

DXY Curncy (DOLLAR INDEX SPOT)   2015-04-29 15-54-14

The weaker USD continues to provide strong support to most commodity prices. Aluminium rallied over 0.6% towards $1,900 and copper reversed from earlier losses and edged higher above $6,100. Crude oil prices rebounded from recent losses and climbed higher after the weekly EIA oil inventories report showed a smaller than expected rise of 1.9 million barrels in crude oil stocks while crude stocks at the key location of Cushing, Oklahoma, dropped by 514,000 barrels.    

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