By IFCMarkets
On Monday, the American stock market had a multidirectional movement
On Monday, the American stock market had a multidirectional movement. The Dow Jones Industrial Average rose by 0.28% and updated its historical high. This happened on the background of raising the target level of Boeing shares (+ 0.49%) by JPMorgan analysts. S & P 500 and Nasdaq Composite fell slightly yesterday. Published US corporate reports were positive. Currently investors expect the growth of total profit of the companies from the S & P 500 list for Q2, 2017 by 10.8%. In early July, they predicted an increase of only 8%. Today, after closing the trades on the US stock exchanges, the quarterly reports of Apple will be published, which can greatly affect the dynamics of the US and global stock markets. In addition, investors expect the publication of economic statistics. At 14-30 CET, the data on personal income and expenditures and at 16-00 CET – the ISM Manufacturing PMI will be released in the US. The futures for the US stock indices are now traded “in the black.” On Tuesday, the dollar index continued its decline and updated its 15-month low. The market participants negatively perceived the resignation of the White House Communications Director Anthony Scaramucci. In their opinion, the personnel reshuffle in President Donald Trump’s office increases political risks. According to Fedwatch futures, the probability of the Fed rate hike by the end of this year fell to 47%, while last week it was above 50%. In general, the US dollar index fell by 2.9% in July of this year. This is much worse than the dynamics of the stock indices. Over the past month, the S&P 500 rose by 1.9%, Dow by 2.5% and Nasdaq by 3.4%.
The resignation of the White House Communications Director Anthony Scaramucci helped strengthen the euro
On Monday, the stocks of European companies were traded with high volatility. At the end of the day, most of the stock indices fell. Investors negatively reacted to the decline in the German retail sales in June. At the beginning of the day the euro slightly decreased on the background of July inflation data in the Eurozone. It turned out to be low and almost coincided with the forecasts, which reduces the probability of an early increase of the ECB rate. Later, the euro markedly rose and updated its high of 2 and a half years. This was contributed by the weakening of the US dollar after the resignation of the White House Communications Director Anthony Scaramucci. Today, European stock indices are growing due to positive reports by BP, DirectLine, CYBG and Man Group. The data on GDP growth by 2.1% for Q2, 2017 were published in the Euro zone. They coincided with the forecasts and did not have a significant effect on the market dynamics. Investment bank Morgan Stanley published a study according to which, the euro strengthening by 10% reduces the total net profit of European companies by 5-8% and cuts the EU GDP growth by 0.7%. Since early 2017, the euro has already strengthened by 12.4%. According to Morgan Stanley, this could worsen the prospects for the European economy.
Nikkei index rose on Tuesday thanks to positive reports by Nitto Denko (+ 3.7%) and Mitsui Sumitomo Financial Group (+ 2.3%). It decreased by 0.5% in July. A noticeable negative impact on the dynamics of the Japanese stocks was the strengthening of the yen by 1.8% against the US dollar over the past month. On Wednesday at 7-00 CET, the consumer confidence index for July will be released in Japan.
Sugar prices continued to rise after the tax cut on ethanol in Brazil. Market participants believe that they will increase the use of sugar cane for fuel production and reduce sugar production. The cost of oil remains stably high on the background of the possible US sanctions against Venezuela, which produces about 2 mln barrels per day. On Wednesday, official weekly data on the US oil reserves will be published. According to forecasts, their reduction will continue to be 2.9 mln barrels, which may support the further price growth.
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