By IFCMarkets
Yesterday most of European and American markets were closed for a holiday. In general, it should be noted that stock quotations grew on the current week. On Tuesday it became known that final GDP of the USA for the third quarter rose unexpectedly to 5%. As a result of S&P 500 and Dow grew six days, for the first time since June, and were able to update the record highs. The US dollar index was trying to consolidate above the psychological level of 90 points. However because of investor’s low activity, it is not yet possible. There is no more significant macroeconomic data released for today in the US, but at the main exchanges the auction will take place. As many investors continue to celebrate Christmas, we don’t expect high activity in the markets. Currently, US stock indices futures are traded little up.
Most European stock markets do not work today because of Christmas celebration. This week euro exchange rate updated a minimum to the American dollar owing to excellent data on GDP of the USA and in lack of especially significant statistics in the Eurozone. On Sunday will be released information on retail sales in Germany in November. This year more essential macroeconomic indicators in the EU aren’t expected.
Nikkei grew up this week with other global stock indices. It was in a neutral trend last three days. Index approached the December recent highs, but could not overcome them because of some strengthening of the yen against the US dollar. With the reduction in world oil prices, inflation in Japan in November fell to 2.7% from 2.9% a month earlier. Inflation in Tokyo in December also decreased from 2.4% to 2.2%. Note that this week’s two-year Japanese government bond yield had fallen to a record low of minus 0.04%. We don’t exclude that it promoted today to the resumption a slight weakening of yen against the dollar. There will be no additional considerable macroeconomic data from Japan this year.
Brent crude oil for a while was fixed at $ 60 per barrel. Earlier this week, Saudi Arabia announced that it will not cut production even if quoted prices will fall down to $20 per barrel. However, in reality, even the current price level brings her problems. For example, Saudi Arabia was forced to put in next year’s budget oil price of $80 per barrel, which is much higher than current prices. Even in this case, the budget will still be a deficit of $40 billion. Market participants believe that Saudi Arabia as the leader of OPEC, may still consider the possibility of reducing production. We will remind that the countries of OPEC refused reduction of production and make 30.3 million barrels a day that is a little higher than an official quota of 30 million. In the USA the total production of liquid hydrocarbons in two last years has increased by 50% and now it makes 9.13 million barrels per day. Production of shale oil provided almost all the gain. Respectively, the United States were cut down by purchases of hydrocarbons in the world market on 3 million barrels per day. This “extra” volume provoked current falling of the prices almost to 45%, on unchanged OPEC production. International Energy Agency predicts increase in world oil demand next year on 0.9 million barrels a day. Of course, it is less, than recent surge in US production, but even such increasing may support quotes.
The price of frozen beef resumed its decline after Christmas. Market participants believe that the largest US retailers have already completed the purchase of meat for the New Year’s holiday season.
Free Reports:
The cotton quotes rose Tuesday to two-week high. The governments of India and Pakistan carried out its purchases in state reserves to support local farmers. The program of loans for domestic producers was presented in the USA. On Wednesday, the cotton trade has been reduced, and on Thursday it was not due to the celebration of Christmas.
Market Analysis provided by IFCMarkets