No significant macroeconomic data: investors focused on political news | IFCM
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No significant macroeconomic data: investors focused on political news - 22.7.2014

A price drop in world stock markets was observed on Monday. Investors focused on political news, as there was no significant macroeconomic data in Europe and the United States. The news was negative due to the conflict aggravation in Ukraine and in the Gaza Strip, Middle East. Statements of U.S. companies appeared to be moderately positive, but market participants did not pay much attention to it.



The volatility Index, calculated by the Chicago Board Options Exchange (CBOE Volatility Index, VIX) is 12.8 points and remains near the annual low of 10.28 points, which was detected on July 3. Such low volatility was observed before the financial crisis of 2008. More or less "normal" VIX level is considered to be 20 points. Some investors do not hurry to buy, waiting for correction in the stock market. Last time S&P 500 decreased by 10% only in 2011. Yesterday the trade turnover on U.S. stock exchanges was 13% lower than the monthly average level and amounted to 4.9 billion stocks. However, American stock index futures are growing today. The crashed Boeing "black boxes" were handed over to Malaysia, which slightly reduced the political tension. Additionally, a good report of Chipotle Mexican Grill came out after the trade closing on Monday and its quotes rose 9.3%. Now 66% of the reported companies listed on S&P 500 exceeded preliminary forecasts. It is above the average level over the 20 years, which is equal to 63%. Today at 12-30 CET the basic macroeconomic indicator of the week is to be released in the U.S.: Consumer Price Index (CPI) for June. It is expected to remain at the May level. Therefore, a significant impact on the market may occur if the actual data differs from the forecast information. At 14-00 CET the U.S. Existing Home Sales is to be released. In our opinion, the forecast proves to be positive. Many reports of large companies are coming out today. Before trading begins the quarterly reports will be announced by such companies, as DuPont, Coca-Cola, Lockheed Martin, McDonald's; and after the trade closing: Juniper Networks, Broadcom, Microsoft.

European stock indices move along with the American ones. Yesterday they fell, and today a rise was observed. Let us note the weakening of the euro against the U.S. dollar. Ukraine borders the EU, so there is a bigger negative political impact on the European currency and stock quotes. There is no especially important macroeconomic data to come out in the Eurozone today.

Nikkei continues to have active fluctuations at the neutral trend under the influence of external factors. Japanese yen remains stable and also keeps to the neutral trend. Investors consider it to be a "defensive" currency as the military action takes place close to the EU. The macroeconomic data will be released in Japan on Thursday morning.



Oil prices are growing for two days due to the economic sanctions against Russia, the second largest oil producer in the world, as well as the Arab-Israeli conflict aggravation. According to forecasts, last week the U.S. oil reserves reduced by 2.8 million barrels more, after they fell by 7.5 million two weeks ago. The data is to be released normally on Wednesday. In theory, they can support the quotations.

Copper prices rose slightly. According to Copper Study Group review, the global market experienced the copper shortage in April and May, 183,000 tons and 84,000 tons, respectively. It is also possible that copper follows the zinc, which rose to its three-year high.



Frozen concentrated orange juice reserves in Brazil reduced to 534,000 tons in 2013/2014. This is 30% less than the previous season. CitrusBR Group awaits a further reduction to 364,000 tons by the end of 2014/2015, and this trend is explained by the Brazil drought. Cepea agency expects the juice exports from this country in the current season will be the lowest since 2001/2002. Let us remind you that in early July USDA lowered slightly its forecast for the U.S. orange crop, from 160.3 to 160.18 thousand boxes.

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