US bourses were mostly lower at the close yesterday although they were well off their worst levels helped by financials benefiting most from a hawkish Fed statement and Oil paring losses to help the key Energy space.
Accendo Markets Analyst, Mike van Dulken commented – “The Fed’s update suggested it sees no reason to shy away from more rate hikes this year, viewing soft Q1 data as transitory and thus leaving the door open for a June hike. The probability of a hike next month jumped to 90% helping the Dollar index back up above 99 to weigh which is helpful for respective national bourses via reciprocal weakness in the Yen, GBP and EUR.”
It’s worth noting that Apple retraced much of its results inspired share price drop yesterday. It’ll be interesting to see whether Facebook can do the same – shares fell 2.5% after hours as advertising limits overshadowed better than expected revenues and earnings.
In focus today will be digestion of last night’s hawkish Fed policy statement and what turned out to be a lively French Presidential debate between Marine Le Pen and Emmanuel Macron prior to Sunday’s second round run-off.
Mike van Dulken added – “Data-wise, European PMI Services will dominate the first hour of trading with improvements expected in Spain, Italy, France and the Eurozone, but pullbacks for Germany and the UK, although all are sure to remain well above the 50 threshold between growth and contraction.”
Looking ahead to tomorrow, traders will focus their attention on the release of the US Non-Farm Payrolls report which analysts expect to rebound higher after last month’s bearish reading.
ADS Securities Analyst, Konstantinos Anthis noted – “Should the labor market report come in line with expectations, the Dollar should get a further boost to the upside as it approaches strong resistance levels against the European majors. A break below the 1.0850 and 1.2850 levels against the Euro and the Pound respectively is possible, but the euro may get support as it appears that Macron is leading Le Pen in the polls for the French election on Sunday.”