By IFCMarkets
On Friday, both the dollar index and the US stocks fell.
US major stock indices closed in the red on the background of weak quarterly reports of the manufacturing company General Electric. Its stocks fell by almost 3% to the lowest since October 2015 and pulled along the assets of similar companies, such as Caterpillar and 3M. The Friday negative dynamics did not prevent the S&P 500 and Nasdaq from increasing for the third consecutive week. Market participants expect the total profit of companies from the S & P 500 list to grow by 8.6% in Q2, 2017. This is higher than the forecasted growth of 8% at the beginning of this month. The Friday turnover on the US stock exchanges was by 9.2% lower than the average for the last 20 trading sessions. The US dollar index continued to decline on Friday after the ECB meeting on Thursday and the significant strengthening of the euro. Investors expect the ECB rate to grow next year. An additional negative for the US currency was the escalation of the political struggle in the US and, in particular, the resignation of the White House Press secretary Sean Spicer. Today at 16-00 CET, the data on the US existing home sales for June will come out in the US. The forecast is moderately negative.
On Friday, the euro exchange rate continued strengthening on the background of Mario Draghi’s speech at the ECB meeting.
Euro updated the 2-year high against the US dollar. The European stock index STOXX 50 decreased. The growth of the euro may reduce the incomes of European exporters. The British pound fell against the euro to its lowest in 8 months. Market participants believe that Brexit will not work in favor of Great Britain’s economy. Today, European stock indices continue to decline on the background of the publication of weak economic statistics. According to the Markit agency, the German and European PMIs dropped in July. They were worse than the preliminary forecasts.
Nikkei fell on Friday on the background of the strengthening of the Japanese yen against the US dollar. In addition, investors made profits from the growth of steel companies’ stocks. World steel prices began to correct down after a strong increase. The Japanese Mining index fell by 1.2%. On Monday, Nikkei continued to decline, while the yen continued strengthening against the US dollar. It should be noted that the Bank of Japan meeting took place last Thursday. Its representatives announced the continuation of the loose monetary policy, monetary emission and the preservation of low rates. Investors do not exclude that this could lead to the weakening of the yen. The yen is at its lowest of 17 months against the euro, and at its lowest of 19 months against the Australian dollar.
World oil prices rose on Monday in anticipation of the meeting between the representatives of OPEC countries and independent producers in St. Petersburg. It will discuss the measures of implementing the agreement on the production limitation, extended in May this year. Oil prices were also supported by the comment of the Baker Hughes company about the reduction of the active rig count in the US for a week by 1 unit to 764 units. Thus, the reduction in the rig count continues for 2 consecutive weeks, for the first time since January 2017.
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