Despite positive PMI data, the economic recovery is losing steam - Market Overview

Despite positive PMI data, the economic recovery is losing steam - Market Overview

The Purchasing Managers’ Index data published yesterday in Europe, the United Kingdom and the United States revealed a slowing momentum for the economic recovery.

Although figures remain at high levels, with Manufacturing PMIs hitting 61.2 in the U.S, 61.5 in Europe, and 60.1 in the U.K, the growth rate is slowing down. However, this could be somewhat expected, given the enormous boost seen in recent months following fiscal stimulus policies and expansionary monetary policies.

But these economic figures had little impact on the market. The investors’ attention was focused on the Delta variant and the Federal Reserve's decisions regarding the tapering process.

The previous week was dominated by uncertainty surrounding the pandemic, due to many Asian countries, as well as Australia and New Zealand implementing restrictions measures and national lockdowns. This situation triggered a shift in market sentiment towards greater risk aversion, threatening corrections in stock indices and leading to declines in the Forex market. However, delta concerns faded almost overnight, the market turned around, and the dollar weakened.

After breaking the important level of 1.1700 during the past week, the EUR/USD pair could not consolidate this movement and bounced above this area. From a technical analysis point of view, the trend is still bearish, encountering a resistance level in the 1.1750 area, above which it would reach the main level located at 1.1800.

U.S. Stock Indices.

The North American stock indices performed well, recording increases of above 1%, especially the Tech100. The recovery of this index appeared to be attributed to Fed’s most recent announcement about the tapering process.

After the U.S. Central bank announced the meeting would take place virtually, many analysts saw this as a sign of concern about the pandemic. They concluded it would be difficult for the Fed to announce a withdrawal of stimuli during this meeting. The technology index would be, in principle, the most affected by an increase in interest rates, and therefore reacted very positively to the news.

Sources: Bloomberg, reuters.com.

Informațiile prezentate în acest document sunt pregătite de Miguel A. Rodriguez și nu au intenția de a constitui consultanță pentru investiții. Informațiile din acest document sunt furnizate drept o comunicare generală de marketing cu scop informativ și, ca atare, nu au fost pregătite în conformitate cu cerințele legale concepute pentru a promova cercetările independente în domeniul investițiilor și nu sunt supuse niciunei interdicții de abordare înainte de diseminarea cercetărilor de investiții. Nu au în vedere obiective specifice de investiții, situații financiare sau nevoi specifice ale vreunui destinatar.

Utilizatorii/cititorii nu ar trebui să se bazeze exclusiv pe informațiile prezentate aici și ar trebui să facă propriile lor cercetări/analize, prin citirea cercetărilor de bază.

Key Way Investments Ltd nu influențează și nici nu are vreo contribuție la formularea informațiilor conținute de acest document. Conținutul acestui document este generic și nu ia în considerare circumstanțele personale ale fiecărui individ, experiența de investiții sau situația financiară actuală.

Prin urmare, Key Way Investments Ltd nu va accepta nicio responsabilitate pentru eventualele pierderi ale traderilor datorate utilizării sau conținutului informațiilor prezentate în acest document. Performanța din trecut nu este un indicator viabil pentru rezultate viitoare.