Morning International Markets Review

Morning International Markets Review

7 July 2017, 10:13
Andrey Egorov
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On Thursday, the stock indices showed a single strengthened negative dynamic and closed in the red zone. The Dow Jones fell by 0.74% (21320.04), S&P 500 down 0.94% (2409.75). The Nasdaq declined 1.00% (6089.46). European markets also traded in negative territory in a single dynamics. The German DAX slipped by 0.58% (12381.25) , British FTSE 100 dropped 0.41% (7337.28).

 Yesterday the American market could not stand under the pressure of negative factors and went into a fall. The decline started in the technology sector, where are companies with a greater degree of risk and expectation of return of capital in a few years. Then, under the impact of falling oil sales began in the energy sector. Investors were reducing long positions in the overheated market. The appearance of the negative background began with the publication of the minutes of the last fed meeting, which not showed consensus of the Committee members on plans to tighten monetary policy. Next test launch of North Korean missiles increased risks from geopolitical factor on the eve of the G-20 summit, which begins today. Added fuel to the fire, Donald Trump, promising pre-emptive action to Pyongyang if they will not stop nuclear program.

 The publication of data from Automatic Data Processing (ADP) regarding employment in the U.S. in June was a trigger for fall of indexes. The number of jobs in June amounted to 158 thousand, what is below expected 185 thousand. The number of initial claims for unemployment benefits rose by 4 thousand to 248 thousand, which is also worse than the forecast of 243 thousand. Today it is scheduled publication of official data, and if the statistics from ADP is confirmed, we can expect further development of correction in the U.S. market. Yesterday the index of wide market S&P 500 gone down out from the consolidation range and for the first time in a month it closed below the lower boundary of the range 2450-2420, the nearest support now is at a level of 2400.

 Among the leaders of the fall it is better to highlight capitalization of the Tesla company, which lost 3.7%. The main reason is the sales results of the Model S and Model X, which were below expectations. Also the Model S has received a weak rating during testing, the insurance Institute for highway safety.

The dollar continues to weaken against the major reserve currencies. The reasons of that are negative data from the labor market and actions of the Central Banks of other countries to strengthen their courses. Today's decline against the yen related to the statement of the Bank of Japan on the large-scale purchase of bonds to reduce their yields.

 The reduction of oil inventories according to API, as well as yesterday's report from the EIA about the reduction by 6,299 million barrels, did not give a reason for the recovery of quotations. The main reason for the continued decline remains a weakening dollar as the quote currency. The rest factors of pressure still have a place.

 

 



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