IFC Markets - Analytics

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    Dollar Index hit 3-month high

    American stocks advanced further on Friday. The high-tech Nasdaq index has recorded a historical high for 2 consequent days. Google reported higher-than-expected earnings for the first time in six quarters. The company shares tumbled almost 12%. Facebook gained 4.5%. General Electric increased this year financial forecast as its shares climbed 0.7%. Inflation in the USA was slightly above the May statistics. It has been constantly expanding for 5 straight months. Housing permits outstripped forecast, rising to their strongest since 2007 – to 1.34mln in absolute terms. University of Michigan Consumer Confidence index slipped in July but has been balancing above 90 for 8 months. Market participants suppose that general macroeconomic data make Fed rate hike this year more likely. For that reason the American dollar strengthened and US ICE Dollar index rallied to a 3-month high. The American stocks turnover was 8% below the monthly average, making 6.1bln shares. No important macroeconomic news is expected today in the US. This week a number of large companies and banks will release earnings reports. Market participants will be looking forward to read surveys by Yahoo, Qualcomm, Texas Instruments, Microsoft, Apple, Bank of America, Citigroup and Goldman Sachs. They may have an impact on the market. International Business Machines is to publish economic data today. Bank reports are significant because investors expect a boost in quarterly corporate earnings among financial companies: S&P Financials may jump 19.1%.

    market-overview-chart-dax-index

    European stocks advance further. Greek bank resumed operations, however, the stock exchange in Athens is still closed. European markets expanded on the information that the Danish chemical company OCI will merge with the American fertilizer producer CF Industries. OCI shares added 11%. The software producer Aveva Group reported about the merger deal with Schneider Electric as well; Aveva stocks soared 29%. No important macroeconomic statistics are published today in the eurozone. To be noted, the European stocks trade volumes are very small, they are about 1/3 below the monthly average.

    Nikkei has been rising for 5 straight days, following global indices. Today Japanese stocks are closed due to Marine Day. Bank of Japan will release the June meeting minutes tomorrow at 1:50 CET.

    market-overview-chart-gold

    This morning global gold prices showed strong negative dynamics. The gold futures hit a 5-year low amid stabilization in Greece and the expensive dollar. The bearish movement was accompanied with a volatility boost at Shanghai Gold Exchange. China reported the decrease in gold reserves to 1.65% from 1.8%, recorded in June, 2009. At the same time the absolute volume of gold increased 57% to 1658 tons. Some market participants suppose that China may cut the physical gold reserve volume to 2 thousand tons.

    Drop in gold prices did not affect copper and silver much. Commodity Futures Trading Commission said that hedge funds reduced copper and silver short positions. Meanwhile, the gold net long position has hit the low since 2006, the year when the experts started publishing these data on a regular basis.


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