By IFCMarkets
Yesterday, the S&P 500 updated a half-year high, and the Nasdaq 100 – the historical high
Quarterly financial indicators of the Internet company Alphabet (Google) were better than preliminary forecasts. Its shares increased by 4% and updated the historical high. Amid this, stock prices of similar companies Facebook and Amazon rose by 1.8% and 1.5%, respectively. In general, stocks of the high-tech sector are in great demand. Since the beginning of 2018, the Nasdaq Composite index has grown by 13.6%, and the S&P 500 – only by 5.5%. Stocks of the motorcycle manufacturer Harley-Davidson jumped by 7.7% due to good earnings reports. European countries account for a significant share of the company’s sales. The good growth in stock prices of Harley-Davidson increased investors’ optimism about the trade agreement between the US and the EU. Today, this issue will be discussed by US President Donald Trump and President of the European Commission Jean-Claude Juncker. On the eve of this event, the US dollar index is in a narrow range. Due to good earnings reports, stock prices of drug manufacturers Biogen (+ 4.1%) and Eli Lilly (+ 5%) rose yesterday. Another positive factor for the market was Trump’s statement about the financial assistance to agricultural companies. Stocks of Deere & Co (+ 3.2%), Caterpillar and AGCO increased. Today at 16:00 CET, data on existing home sales will be published in the US.
Investors increased estimates of the growth in aggregate profit of the companies from the European stock index STOXX 600 list from 6.7% to 8.1% according to the results of the second quarter.
This was due to excellent quarterly indicators of the UBS bank, as well as PSA (Peugeot), AMS, Edenred, UPM and other companies. The German IFO business climate index was published today and it turned out to be positive. Nevertheless, there is a calmness in the European stock markets in anticipation of negotiations between US President Donald Trump and European Commission President Jean-Claude Juncker. The exchange rate of the euro rose slightly. Probably, investors think that the meeting of the two leaders will be successful. Shares of luxury goods producers rose due to good earnings reports by LVMH (+ 1.7%), owning the brand Louis Vuitton and others. Stock prices of Kering, owning the brand Gucci, added 1.5% and Hermes – 0.5%. Swiss pharmaceutical company Lonza and French company SEB raised their profit forecast, and their stocks increased by 7% and 10%, respectively.
Investors believe that the 23.000 pips may become a psychological resistance level for the Japanese stock index. Amid trade wars between China and the United States, stocks of Japanese steel companies were in high demand. In particular, stock prices of JFE Holdings grew by 3% and Sumitomo Metal Mining – by 3.8%. Stocks of the logistics company Yamato Holdings fell by 1.7% because of the problems with customers, and Fast Retailng securities – by 0.7% because of possible disagreements with the Bank of Japan.
Platinum prices are correcting upward after the collapse by almost 20% from their January highs. Last week and at the beginning of the month, they fell below $800 per ounce for the first time in 10 years. 70% of platinum is mined in South Africa. A number of local manufacturers claim that mining is unprofitable at current low prices. The main reason for the decrease in prices 2.5 times since 2011 was the reduction in cars with diesel engines after the scandal with the German company Volkswagen, which was accused by the US authorities of distortion of environmental indicators. The GFMS agency forecasts an increase in the world deficit of platinum in the current year for the fifth consecutive year – up to 280 thousand ounces from 53 thousand ounces last year. Note that currently 1 ounce of gold costs nearly 1.4 ounces of platinum. This is the maximum ratio for the entire recent history (from the mid-1980s of the last century).
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