Market participants seem not afraid of US tightening, despite FOMC sounded slightly more hawkish than it was expected. In fact, it is really not important if the upper bound for Libor goes up by another 25 or 50 bp, given the possible slowdown in the US economy. Indeed, the threat of a slowdown seems the most important factor supporting gold. Its importance is particularly visible looking on its relative outperformance over silver, which lost much more than gold since the beginning of 2018, especially in the second part of the year.

Deteriorating economic sentiment was confirmed in the latest Philadelphia Fed index, that fell to the lowest value since 2016. This is not favorable situation for the US stock market, especially as the S&P 500 index has not got support from the FOMC. Technical situation suggests the nearest target for S&P as low as at 2400 pts. Still, the index is currently oversold, so the baseline scenario for the nearest days is a horizontal trend with 2600 pts being the short term resistance. 

Bear market is a baseline scenario also for the German DAX index. It is however increasingly interesting how long the relative underperformance of DAX can be continued. While the economic situation in euro zone may deteriorate as well as in the US, slowdown may not stop ECB from hiking rates, perhaps already in the end of 2019. Looking in longer term horizon, European stocks may offer additional return from euro appreciation so traders may gradually shift their capital from US towards euro zone. For now, this tendency is however lacking macroeconomic trigger. In 2019 it may be the solution to Brexit problem or recovery in Germany, the economy of which was in 2018 hit by new car industry regulations.

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