Stock indexes dropped at the absence of significant U.S. data | IFCM UK
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Stock indexes dropped at the absence of significant U.S. data - 8.7.2014

On Monday global stock indexes dropped at the absence of significant U.S. economic data. Investors are reluctant to buy stocks before the second quarter earnings season of American corporations. The trade turnover on U.S. exchange markets was 17% below the average over the month and amounted to 4.81 billion stocks. The majority of the market participants are still very optimistic though. Following the release of good data on the labor market last week, the second quarter U.S. GDP growth is expected to be 4%. Therefore, it should significantly exceed its slump by 2.9% in the first quarter. According to forecasts, the second quarter overall return of the companies from the S&P 500 list will jump by 6.2%, meanwhile in the third and fourth quarters by 10.9% and 11.9% respectively.
Let us highlight that last time there was the revenue growth in the third quarter of 2011 and it amounted to 18%. After that S&P500 increase exceeded 20% in the fourth quarter of the same year. Presently 133 companies listed in the index published the preliminary information. Among them: 97 are negative reports, 24 positive and 12 neutral earning reports. We believe, it is the evidence of the price drop risk presence, if the overall return of 500 companies disappoints investors. S&P500 Р/Е ratio (price per share/earnings per share) is now the highest in nine years and amounts to 15.6. Today after the trade closing the aluminum company Alcoa is going to submit its report. Later on Thursday the retailer Family Dollar Stores data will come out, and on Friday Fastenal Co and Wells Fargo & Co will publish their reports. Significant U.S. macroeconomic data is not expected today.

Yesterday European stocks tumbled as the negative macroeconomic data from Germany and the data on possible IMF forecast reduction appeared. More information about that you can find in our previous market overview. Yesterday there was a little trade turnover on the EU stock exchanges. For the stocks listed in FTSEurofirst 300 Index the turnover occurred to be 58% below the three-month average. This morning German foreign trade indicators has been released and appeared to be relatively good. Other macroeconomic information is no longer expected.

Nikkei traded today within the neutral short-term trend. It was supported by the Japan trade deficit decline in May and current account increase. Moreover, the increase is observed for the fourth consecutive month. Exports in May rose 2% compared with the last year, while imports slipped 0.4%. The negative factor was the stock purchase shrinking, announced by three quasi-public pension funds. They decided to wait until Japanese companies release their quarterly statements. Unlike the United States, the Japanese earnings season starts off a month later, in early August. Tomorrow morning at 6-00 CET industrial equipment orders index for June is issued.

Tomorrow at 1-30 CET in China Producer Price Index and inflation data for June will be announced. From our point of view, the preliminary forecasts are positive. This fact can maintain the commodity futures quotes.

In two weeks oil price slipped 5% after the exports normalization from the ‘trouble’ countries, such as Iraq and Libya. Meanwhile, according to the forecast U.S. weekly oil reserves can drop by 2.7 million barrels compared to the previous week, and 9.9 million barrels compared to the previous year. The official data on oil reserves will be released tomorrow. U.S. gas reserves are expected to jump by only 88 billion cubic feet against the growth of 100 billion a week earlier. Information on gas will be released on Thursday.

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