By IFCMarkets

On Friday the US shares were on decline amid the strengthening US Dollar index. The investors reacted on the Fed statement on the global economic risks. The leading indicator in August was weaker than expected. Due to the falling quotes, the P/E ratio for S&P 500 went down to 15.6 which is still above the 10-year average of 14,7%. The trade volume on the US exchanges was the highest in this month reaching the 10.9 bln. shares which is 35% more than the 20 sessions average of 8.1 bln. In our opinion, the statements by the ECB and the Bank of Japan on the possible further monetary policy loosening contributed to the stronger Dollar. This implies the further Euro and Yen emission. No significant positive news was in the US. Today the US currency is slightly correcting down within the long-term neutral trend. According to the futures quotes, the probability of the rate hike in October is 11%, in December 42% and in January 52%. Today at 16:00 CET the US housing statistics for August is to come out. The tentative outlook is negative.

The European stock indices are sliding down today for the 3rd day in a row. The German Volkswagen stopped selling the diesel vehicles in the US after the charges of substandard software underreporting the emissions. Its shares slumped by 15% which caused the 4% decline in the BMW and Daimler shares, other German car makers. Note, that the new Parliamentary elections were held in Greece with the radical left coalition “Siriza” winning. Previously, the Party advocated the writing-off of external debts. We admit the possibility of the new political risks which may hinder the ongoing bullish trend in Euro. The trend is remaining unchanged already for half a year. Today in the Eurozone no significant macroeconomic data is expected.

On Friday the Nikkei Index plummeted together with the other world indices. The Japanese financial markets are closed till Thursday due to the holidays. But the Wednesday morning is to see the September PMI in China which may influence the Yen and the commodities futures.

Today the oil prices are slightly increasing amid the following news. The official export from Saudi Arabia contracted by 89 thousand b/d to7.276 mln. The decreased production in this country was more sufficient totaling 200 thousand b/d to reach 10.361 mln. The Goldman Sachs bank forecasts the US oil production to contract by 250 thousand barrels a day in the second half of the year. The U.S. Commodity Futures Trading Commission reports the gross shorts in oil to contract for the 5th week in a row. Baker Hughes, the oilfield services company, reported the decreasing number of the active oil-drilling rigs in US for the 3rd week in a row by 47 to 644 units.

The coffee prices have stabilized near the two-year lows. The National Federation of Coffee Growers of Colombia reported the possible export contraction by 20% due to the El Nino effect. Previously the export was estimated at 13 mln. of 60 kg. bags. Columbia is ranked the 4th among the coffee producers with the 7.5% market share. Latin America accounts for 53% of the global coffee production. The worse weather conditions may provoke the price growth in the region.

The soy prices plunged on Friday after the Brazilian Agency Safras & Mercado revised up the crop forecast for season 2015/16 to 100.54 mln. tonnes from 99.3 mln. tonnes expected in July. The Federal Brazilian Agricultural labour Union (Anffa) declared a strike. This may contribute to the price growth for grains, for corn especially.

Market Analysis provided by IFCMarkets