In the last trading session of previous week, the stock indices showed mixed dynamics and closed in different directions. The Dow Jones added 0.11% (21384.28), S&P 500 rose 0.03% (2433.15), the Nasdaq lost 0.22% (6151.76). European markets have grown together and closed at the green zone. The German DAX gained 0.48% (12752.73), British FTSE 100 climbed 0.60% (7463.54).
Today it is expected a few publications of the macroeconomic data and the speeches of the monetary authorities that could affect investors' decisions during the trading sessions.
At 01:00 MSK the Index of consumer sentiment from Westpac New Zealand for the second quarter
At 02:30 MSK Speech by RBA Lowe
At 02:50 MSK trade balance of Japan with the seasonally adjusted
At 15:00 MSK FOMC member Dudley speaks
At 18:00 MSK the President of the Bundesbank Weidmann speaks
New car sales rose 7.6% according to statistics in Europe. This entailed a growth stock automotive companies and heavy industry. The approval of granting Greece another aid in the amount of 8.5 billion euros was an additional growth factor for indexes in the region. The election of the new President of France and a high multiplier values on the American stock markets were also the reasons for European markets to increase in recent time. Now some investors seek to transfer part of the assets of the U.S. market to the European.
On Friday growth of the American indexes was restrained by weak macro statistics. Preliminary index of consumer confidence of Michigan University in June has dropped to 94.5 per, equivalent to the level of November last year. Also, the number of permits issued for the construction of houses in the previous month fell to 1168 million which was below the forecast. The volume of construction of new homes has fallen to 1.092 million, continuing a three month trend, and achieve the level of September last year. For American investors, this situation raises suspicion and doubt in the continuation of monetary policy tightening. The probability of a rate increase in September fell to 15% in December to 35%. Amid such statistics, the dollar, barely steadying after the meeting the fed, began to weaken again. EUR/USD corrected upwards to the resistance level of 1.12 that about half the recent decline. The index of wide market S&P 500 was unable to hold on to their goal 2450 continuing to trade in a range 2420-2440 for the third week.
The American market received a support from the growth of companies in the energy sector on the background of though weak, but a correction up in the cost of hydrocarbons. Chevron added 1.9% Exxon Mobil rose 1.5%. Good growth of 2.92% was observed in the capitalization of the company Amazon after it became known about the plans of the online retailer which is going to buy America's largest supermarket chain Whole Foods Market for 13.7 billion dollars, it is might to be one of the largest deals of the year.
In regard to the statistics in America recently the investment attractiveness of gold has increased somewhat, but this has not yet resulted in a local reversal of the downward trend. Last week, the yellow metal fell 1.2%.
Last week was the fourth in a continuous reduction in the cost of oil. For a week loss in price amounted to 2.4%. Now there are all prerequisites to the fact that a new week will continue the trend. Among the factors of pressure now on the side of sellers plays a slowdown in consumption growth in India and China because of new environmental standards and the beginning of a trend of shifting to other fuels. Also, the increased supply from shale producers and countries which have not signed the Pact OPEC+, mainly Nigeria and Libya. The collapse of hopes for increasing demand from the automotive season Aggravates the situation, at the beginning of which the stocks of gasoline have not decreased, as shown by the records of the US Department of energy last week. In the adverse scenario the purpose and immediate support for the oil grade WTI could be the level of 42,50 dollars. per barrel, in the case of growth resistance is in the range 46,30 – of 47.00 dollars. per barrel.
Sincerely, Global FX chief analyst Sergey Melnikov.