Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European shares traded higher, reflecting the statements of Janet Yellen. However, the positive effect of the Chairman of the Fed testimony should be limited due to the strong appreciation of the Euro against the Dollar (1.13 at 7:20 AM). By decreasing the likelihood of rising interest rates in the US, the statements of Janet Yellen caused a decline in US yields. One of the variables that most influence a currency pairs is the difference between interest rates of both countries. Thus with lower US yields, its differential to the German (representing the Eurozone) decreases, boosting the Euro. Thus the words of Janet Yellen have a negative effect and another positive, showing the complexity of the landscape of financial markets. The current situation requires some caution. Technically, the stock market indices reached extreme levels of overbought and most recently saw the correction of oil and mining shares, which led the began of the rally in mid-February. Several stocks of these sectors registered gains between 40% and 60% since mid-February to the maximum in March. Thus, this upward movement is based on a dwindling number of titles. At the moment, we only see some warning signs. But if the S & P breaks the area of 2020 and the DAX the 9750 this will power up a correction, at least in the short term.
The US market closed up, mirroring the statements of Janet Yellen. Briefly, the words of Janet Yellen, away from the scene an increase in interest rates in April and greatly decrease the likelihood of a rise in June. As a result of these statements, the shares were valued as bonds and some commodities. The main exception was oil price (-2.58%) due to the continuing evidence that Iran will not join the agreement to freeze production and the news that Kuwait and Saudi Arabia will reopen a joint operation, which was closed since 2014 for environmental reasons. The indicators that were published continue to describe a very solid economic situation. The S & P / Shiller index, which measures prices in 20 major US metropolitan areas, increased by 5.70% in January over the same month of 2015. This variation is framed in substantially the estimates of economists. As the rise in house prices has been higher than the increase of income of many Americans, several families have preferred to renting. Consumer confidence, as measured by the Conference Board, showed an improvement in March 92.2 to 96.2, exceeding forecasts of 94.0. Today, the publication of the ADP report, which measures the employment generated by the private sector, should have an limited impact and a short duration from the start of the session. Although its correlation with the official employment report is not high, many economists use reading this indicator to improve their estimates for the employment report to be published on Friday.
Most Asian markets closed higher, because of the conciliatory words of Janet Yellen. The only exception was the Japanese stock market which was penalized by the appreciation of the Yen against the Dollar.