By IFCMarkets
On Thursday, the US stocks prices almost did not change
Corporate earnings reports were neutral, but investors again raised the forecast for the S&P 500 net profit. It will not be easy to justify such optimism.
Currently, 227 companies from the S&P 500 list have reported for the Q4 of 2017 and 80% of them exceeded the net profit forecasts. Since the beginning of the year, this index has grown by almost 6%. At the same time, investors are currently expecting the growth of the net profit of the S&P 500 companies by 14.9%, and not by 12% as forecasted at the beginning of the reporting season. Yesterday, the weak earnings report by UPS company came out, which resulted in the decrease in its quotes by 6.1%. This negative was offset by the positive eBay report (+ 13.8%). In addition, the banking sector has increased in anticipation of a Fed rate hike by about 1%. Yesterday’s economic data turned out to be positive, weekly unemployment slightly decreased. Although the ISM Manufacturing PMI slightly decreased in January compared to December, it still exceeded the preliminary forecasts. This did not support the dollar index, which fell on Thursday.
This morning, futures on the US stock indices significantly fell on the background of weak reports of such large companies as Alphabet, Google parent company, and Apple. The data came out after yesterday’s closing of trades. In addition, the 10-year Treasury yields rose again, approaching 2.8% in annual terms, which is the 4-year high. Government bonds are competing with stocks for investment money. Today at 14-30 CET, important data on the US labor market for January and the number of Non-farm Payrolls will be released in the US. At 16-00 CET, the data on industrial orders for December will be published. The indicators are expected to be positive and this supported the growth of the dollar index in the morning.
On Thursday, European stock indices fell and continue to decline today
This was supported by the corporate information, but the eurozone economic data turned out to be positive
On Thursday, the reports of the telecommunications companies Novo Nordisk, Vodafone and TDC worse than expected. Because of this, the entire European telecommunications sector fell by 1.5%. Also, another negative was the report of the French BIC SA (-9.4%). Today German Deutsche Bank reported losses in 2017, for already the third year in a row. Its stocks fell by 6.5%, pulling down the entire European banking sector. Yesterday’s data on the eurozone Markit Manufacturing PMI for January were very positive. They confirmed that the European industry is currently growing at the highest rate over the past 20 years and contributed to the euro strengthening. In December Manufacturing PMI was 60.6 points, which is the high since June 1997. In January, it slightly decreased to 59.6 points. Today no significant statistics are expected in the eurozone. The euro strengthening was suspended in anticipation of the US labor market data.
On Friday, Nikkei fell again, but failed to update the recent low
The Bank of Japan announced an increase in the volume of buy-backs of the Japanese government bonds in order to prevent falling prices and increase profitability. Because of this, the stocks of the Japanese banks went down: Mitsubishi UFJ Financial Group (-1.4%), Sumitomo Mitsui Financial Group (-1.2%), Mizuho Financial Group (-1.1%). Since this buy-back occurs at the expense of money issue, the yen has been weakening for the third consecutive day. An additional negative for the stock market was the decline in the forecast for the annual net profit of Kyocera Corp. Its stocks fell by 6.6%. Today the Hong Kong index Hang Seng has fallen for the second day in a row. Over the week, its decline was 1.7% and turned out to be the 2-month high. Chinese index Shanghai Composite fell by 2.7% in a week. This is his highest weekly drop in more than a year.
On Thursday, Brent advanced for the second day in a row, could not exceed the psychological level of $70 per barrel.
UBS calculated that the world oil demand increased by 1.6 mln barrels per day in 2017 and will increase by another 1.3 mln barrels per day this year. Today, oil quotes have stopped their growth amid the reports of an increase in the Nigeria and Saudi Arabia production.
Market Analysis provided by IFCMarkets
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