The last week of June was not successful for the stock markets. During the whole past week, German DAX deteriorated by 3.2%, French CAC40 fell by 2.8% and British FTSE250 went down by 1.8%. In the US, the NASDAQ declined by 2%, the S&P500 decreased by 0.6% and the DJI shrank by 0.2%. This time special attention should be paid to the latest macroeconomic data releases. The readings from the US economy ended run of bad luck and surprised investors positively. The revision of the annualized GDP growth rate stood at 1.4% vs 1.2% expected. In addition, the Chicago PMI significantly exceeded the market consensus – 65.7 pts. vs 58 pts..

The last week’s economic calendar was quite uneventful, so trading in the global financial markets was rather smooth. During the whole past week, British FTSE250 declined by 0.7%, German DAX fell by 0.2%, while French CAC40 increased by 0.2%. In the US, the S&P500 went up by 0.2% and the DJI rose by 0.1%. A slightly more remarkable movement was seen by the NASDAQ (1.8%), which earlier had been shrinking dynamically – a sell – off of the American technology companies’ shares. Moreover, the situation of Eurodollar did not change last week – EUR/USD was in a consolidation at 1.111 – 1.129. However, it is worth paying special attention to some statements of the Fed’s representatives. Unlike to the official FOMC’s statement, their commentaries were quite dovish.

Last week, the market focused on the FOMC meeting. As expected, the council raised the interest rates by 25 basis points, so investors paid special attention to the Fed’s message and a conference with Janet Yellen. These turned out to be hawkish. The FOMC is going to make one more interest rates hike by the end of this year and next three in 2018. In addition, the Fed presented a very precise program to reduce its balance sheet. After all, the scale of the dollar’s appreciation was negligible – it was quite surprising, especially since the ECB maintained a dovish attitude. Furthermore, despite the Fed’s assurances that the US economic slowdown has been only temporary, a series of weak macroeconomic data readings from the US is going on.

Undoubtedly, the last Thursday was the most important day of the past week – the market focused on a decision of the ECB, or rather on a conference with Mario Draghi, on the parliamentary elections in the UK and on Donald Trump’s political problems. In line with the market expectations, the Governing Council of the ECB left interest rates unchanged. Nevertheless, the message of the bank was rather dovish, so the market was toned down, because plenty of investors expected some hawkish statements. Meanwhile, in the UK, the party of Theresa May won the parliamentary elections, whereas it lost its majority in the House of Commons. These results should be considered as a failure of the Theresa May’s idea. A lot of concerns on further Brexit’s procedure appeared in the market, but they only adversely affected pound quotations.

This time the issue of the political risk in the US remained in the background or the market got used to unpredictable Donald Trump. Thus, investors focused on the macroeconomic data readings and the policy of the most important central banks. According to the speeches of the FOMC members, the Fed has wanted to maintain announced pace of the monetary tightening – two more interest rates raises by the end of this year. However, these words had been said before the publication of the payrolls which once again failed. The unemployment rate shrank to 4.3%, whereas the non – farm payrolls stood at 138K vs 185K projected. Of course this does not mean that the Fed will resign from a June interest rates hike, but a series of weaker data from the American economy has been going on - this may be a warning signal.