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Stock markets / situation overview: Current effects of the US dollar?

The US Federal Reserve has been anticipating a rate hike for some time. But how do world markets react to this prospect?

The US Federal Reserve has been anticipating a rate hike for some time. Strictly speaking, market participants - if you look at the leading index S&P 500 - have been speculating on it since around the end of 2014.

During this period, the index was unable to record any gains and is even slightly in the red, which is clearly from the top chart is shown. Is this the beginning of a major correction? And if so, what is the reason for it?

Some analysts take the first half of the year, which has been very weak, extremely seriously, because in the past, a correction has often followed in the past at the beginning of the second year.

Furthermore, the sectoral influence is often mentioned. The strongest sectors have been the biotech sector in recent years. In the past week, it recorded its largest daily loss of 3%. The tech sector, too, had not been able to deliver expected quarterly figures with Apple and IBM.

And what do the EU stock markets say?

In contrast to the Americans, the European stock markets did a run in the first quarter who can be seen. German stocks in particular were in demand, as the cheap euro and the ECB's bond purchase program support investment in the EU area.

However, Greece put a spanner in the works in the second and third quarters, and those driven by monetary policy Exchanges switch to political exchanges that have driven a correction in European equity markets, as the bottom chart of the DAX futures shows.

An agreement has been a matter of two weeks and the provisional exclusion of the Greeks from the EU, the Grexit, off the table - this was considered extremely positive by the market participants. The DAX Future gained over 1,000 points within a very short time.

However, according to analysts, the correction currently impending in the US stock markets is depressing European stock prices despite ECB bond purchases, and the question of all questions is: is it here a really big correction or can the US market turn around?

Technical zones are not really relevant in such sideways phases, in which the S&P 500 index has been since late 2014. As can clearly be seen, highs are easily surpassed before it can go down again with dynamism and vice versa.

In such phases, the probability of continuing the sideways phase is increased. It can only become dangerous if the 200 moving average is tested for a second time within a short period of time and broken down.

The US dollar is also weighing on the stock markets

, although many analysts report that of the strong US dollar had already expected poor quarterly figures in the first and second quarters, they failed to materialize. It was hoped that the US market would not be vulnerable, given that the country's domestic economy is much larger than its export.

Unfortunately, no one thought that the strongest sectors like the one mentioned above The biotech sector and the tech sector have very strong sales abroad. In addition, stocks are represented within these sectors, which have a higher weight for the entire sector. If this weakens, the entire sector weakens.

The lower chart shows that the euro has also been in a recovery phase since the beginning of the second quarter. However, the range of $ 1.15 per euro could not be overcome. What is striking, however, is the close correlation between the EU markets and the EUR / USD exchange rate. A rising euro is weighing on the EU stock markets.

Although the EUR / USD rate is currently in a medium-term downward trend, it is not yet clear whether this trend will continue or whether the price will continue to fluctuate within the tapering triangle, If the latter is the case, a sideways phase in the DAX would also be expected. If the euro weakens again and resumes its long-term downward trend, this would be positive for the DAX and the European markets.

How does the stock market work? - Oliver Elfenbaum

Markets continue to be weak

All in all, still describe the general market picture as quite weak. After a solution was found in politics, the next fundamental problem was already on the agenda of investors: the poor quarterly figures for US companies. The weakness is therefore definitely coming from the US market at the moment.

At the same time, the EUR / USD exchange rate still has no clear direction. The last rebound on the important support at $ 1.08 per euro makes it clear that the momentum for the strong US dollar has declined somewhat. It will be seen in the next few days whether it will be the last pound of the euro before Karacho goes down or whether the sideways phase will continue.

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