By IFCMarkets
Global stocks grew further on Friday. Investors continued speculating on the Ukrainian cease-fire. American Dow, S&P 500 andNasdaq indices marked a weekly gain of 1.1%, 2% and 3.2% respectively, hitting a 15-year high.
S&P utilities lost 1.6% previous week. We believe it reflects investors’ growing confidence in Fed. Rate hike this year. Utilities bonds are kin to treasury bonds and are considered as haven assets. Earnings were released by 391 companies on S&P 500 list: 71.1% of them outstripped their forecast for gross profit and 57.5% – for net profit. The overall growth made up 6.6%, which is below 11.2%, estimated on October, 1, and above 4.2%, estimated on January, 1. Macroeconomic data turned out to be neutral on Friday. A relatively weak Michigan Confidence was compensated with positive Import Price Index (MoM), slipping by 2.8% in January and reaching high since 2008. Prices have been falling for 7 straight months. Market participants expect inflation in the USA to remain low. TodayAmerican stocks are closed due to President’s Day. Stock market trade volume on Friday was 11% below average, amounting to 6.5 billion shares.
European indices have been traded in a range for 2 consequent days in expectation of the EU finance ministers’ meeting, devoted to Grecian bailout. The conference begins today at 14:00 CET. We observe euro slightly strengthening against dollar in the situation being. The ATG index dropped by 3.7% today, following the 5.6% surge on Friday. The EU trade balance for December is to be released today. The tentative outlook is neutral. To be noted, positive GDP in Germany and the EU was issued on Friday. Market has not reacted yet, but if the situation in Greece normalizes today, the single currency and European stocks are expected to expand.
Today Japan reported falling GDP for December. Since the growing Q4 GDP (2.2%) had been announced earlier, the pressure against Nikkei was very weak and it is still traded around the 8-year high. Market participants consider Japan to escape recession it has been suffering from since July-September. Forthcoming important data will become public at 6:00 CET on Wednesday after the Bank of Japan meeting.
As we anticipated in our previous overviews, oil continues to soar, boosting futures for wheat, cotton and cacao. Brent has risen by 30% in 3 weeks with no significant pullbacks due to a number of factors. American oil-workers’ strike has been continuing for 3 weeks. Kuwait minister of Natural Resources leaves room for oil to advance in the second half of the year on the back of probable production curb. Egyptian air forces delivered a strike against Libyan guerillas after several Egyptian citizens had been executed. On top of that, militants meddle in Libyan energy supplies export. Operating oil wells in the USA have reduced to their lowest number since August, 2011.
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Gold futures have been gaining for 3 consequent days amid the Dollar Index retreating. The USA Consumer’s Confidence plunged in February to its 11-year low, which was another factor pinning up gold. We do not rule out that the demand for gold will boost shortly before Chinese New year, celebrated next week. However, the trend may appear to be short-termed, affected by low premium on gold ($3-4 per ounce) at Shanghai Gold Exchange, as against London Exchange. Usually at this period the premium makes up $10. In India it slumped from $16 to $2-3 last month.
Market Analysis provided by IFCMarkets