Global stocks dropped on Friday on the back of boosting US Dollar Index. In the previous overview we mentioned that the world stocks and the Index may move in opposition. S&P 500 500 has declined for 2 consequent weeks as investors estimated rate hike.
Non-Farm Payrolls rose to 295 thousands outstripping forecasts. Unemployment in the US has decreased to its lowest since May, 2008 and made up 5.5%. According to Federal Reserve System, this level corresponds to “the complete employment”, increasing chances for rate hike. Most investors expect it to happen in June. To be noted, the quantity of Americans, seeking employment for 27 weeks or more, has plunged to its 6-year low. In our opinion, this confirms quality improvement on US labor market. The trade volume on American stocks on Friday was 12.5% below 5-day average amounting to 7.2 bln shares. No important macroeconomic data are anticipated in the US today.
Fall in European shares turned out to be far less sharp. As mentioned in the previous overviews, investor expect liquidity inflow to European stocks after the euro emission by ECB. Exports contracted to their 5-month low in January. It has driven further decline in eurozone stock indices. No statistics of special importance are expected today in the EU.Nikkei edged higher on Friday and sagged today with other global indices. Moderately negative economic data have become public this morning in Japan. Estimated GDP (quarter over quarter) was cut from 0.6% to 0.4%. This was partly offset with contracting negative surplus in trade in January. Consumer spending in Q4 grew 0.5%, compared to expected 0.3%. This makes some market participants apprehend rising inflation. We remind that consumer prices report is expected on March, 26. No macroeconomic data are released in Japan today.
Trade balance for February was issued in China today. Contrary to estimates it turned out to be positive.
China is going to increase the number of copper-trade broker licenses as part of financial reform. It underpinned copper quotes. Market participants anticipate further expansion in copper reserves in China (the metal is used as a credit guarantee in the country). To be noted, Chinese copper import in February made up 280 thousand tons which is one third less than in February, 2014. This has driven down global copper prices. But now investors are more optimistic. According to US Commodity Futures Trading Commission, copper net long position has been shaped for the first time since last September.
Oil prices retreated as OPEC representatives declared it wouldn't curb production to “sponsor” shale oil extraction in the US. More than that, market was affected by Goldman Sachs's forecast saying that WTI price would be below $40 per barrel. It may happen because of the several factors: oil reserves in the US are abundant, the winter season is coming to end, the demand for oil in Japan decreased due to 2 nuclear plants becoming operational for the first time since the Fukushima accident. In the previous overviews we stated that Goldman Sachs expected gold to drop to $1000-$1100 per ounce. Now the quotes are moving in this direction.
Gold prices plummeted to their 3-month low amid the boosting dollar as US Non-Farm Payrolls appeared to be fairly better-than-expected. However the premium on gold in China hasn't declined yet. That may illustrate that the demand for the precious metal is sustainable.