By IFCMarkets

The global stock markets did not have any sharp trend on Wednesday despite the positive data on the U.S. wholesale inventories for April increased by 1.1% against expectations of 0.5%. This figure is included in the calculation of the GDP changes. Probably, low investor activity prevents the “rally” from continuation because they are confident about the further price growth.

The trading volume on U.S. exchanges yesterday was 17% below the average for three months and made 5.2 billion shares. The S&P 500 index has grown within 32 months without any significant corrections at least by 10%. While its average non stop growth continuation since 1945 is only 18 months. The last correction was observed only in 2011, from April to October. Note that market participants now expect aggregate profits of the companies included in the S&P500 to increase in 2014 by 7.4%. There were more optimistic growth forecasts of 9.7% in January. In our opinion, the main growth driver for the U.S. stocks was the QE program or redemption of government bonds by printing money. During the three QE stages, since March 2009, the S&P500 rose by 188%. Now this program is reduced by $ 10 billion per month. We do not exclude the U.S. stock market correction along with the QE completion and the Fed’s monetary policy tightening (rate hikes). Recall that its next meeting will be held next week. Yesterday the yield of 10-year U.S. government bonds (notes) set a new monthly high at 2.65%. Today, we do not expect any significant economic data from the U.S. and the Eurozone.

The U.S. futures, as well as European stocks are falling down this morning. The World Bank (WB) has lowered its forecast for the global economic growth this year to 2.8% from 3.2% in January. The U.S. GDP growth forecast eas lowered to 2.1% from 2.8%. The World Bank expects that this year the EU economy to grow by 1.1%, Japanese economy by 1.3%.

Japanese Nikkei corrected upwards today after yesterday’s fall. The MSCI indexes excluded South Kore and Taiwan indexes from the list of indices of developed countries. Thus, only is left Japan among the Southeast Asian countries. This has contributed to increased demand for Japanese stocks from large international hedge funds that invest focusing on indices composed by MSCI. Tonight, we will see the Industrial Orders in Japan for April released at 23-50 СЕТ. In our opinion, the forecasts are negative..

Due to uncertain growth in global stock indices, the Gold price reached a 2-week high. Earlier, we noted that it moves in the opposite with the U.S. securities market. This can be used to create a personal composite instrument.

The Copper price stabilized. Investors have not decided yet, what is more important – the Qingdao port lending investigation, which could reduce the demand in China or the cumulative reduction of copper reserves on the London, New York and Shanghai exchanges by 42% to the lowest level since 2008, indicating that there is a high demand for this metal.

Today, the USDA will publish its report containing the forecasts for the crop and stocks of cereals at 16:00 CET, which can affect the quotes. The consensus forecast is presented in the table. Note that the Wheat quotations were supported by forecast of reduction of its harvest in Australia due to El Niño by 1% despite the agricultural land increase by 2%. Investors do not exclude further negative meteorological forecasts.

Market Analysis provided by IFCMarkets