Investors expect the data on the US labor market
On Thursday, there was not a single trend in the US stock market.
On Thursday, there was not a single trend in the US stock market. S&P 500 and
Nasdaq slightly decreased, while Dow Jones Industrial Average grew for the 7th consecutive time. Based on the reporting companies’ data, investors currently expect the growth of the total profits of companies from the S&P 500 list by 11.8%. At the same time, the net profit for Q3 may grow by another 9.2%. Yesterday, a more active growth in US stocks was prevented by the decline in the Services PMI for July by ISM, as well as the continuation of political scandals regarding the victory of Donald Trump in the presidential election. The Thursday turnover on US exchanges was by 8.2% higher than the average for the last 20 trading days. Today, futures for US stock indices are in the black in anticipation of publication of the US labor market official data for July at 14-30 CET. A small decrease in the number of new jobs is expected. At the same time, the US trade balance for June will also be released. The dollar index continues to fluctuate near the 15-month low.
Bank of England retained the rate and lowered the forecast for the UK economic growth
The euro is increasing for the 2nd consecutive day
On Thursday, European stock indices slightly decreased, except for the British FTSE 100, which rose to the 6-week high due to the weakening of the Pound. The Bank of England retained the discount rate at a historical low of 0.25% and noted the existence of economic risks. The decline in the national currency may increase the profits of British exporters. The European energy sector fell by 0.85% due to the weak report from the Finnish oil company Neste and a decline in its quotes by 7.8%. On Friday, the decline in European stock indices continued on the background of negative reports of the insurance company Swiss Re. An additional negative was the decrease in the retail trading PMI for July in the Eurozone, which occurred on the background of the growth in its June volumes and, therefore, was unexpected for the market. Currently in Q2 2017, about two-thirds of the European companies reported. Market participants believe that the total profit will increase by 22%. Today the euro is growing for the second consecutive day. Yesterday, its strengthening was contributed by the weakening of the British pound after the Bank of England announcement. It slumped to the 9-month low against the euro.
Further strengthening of the yen may reduce the profits of Japanese exporters
The Japanese stock index Nikkei slightly decreased on Friday against the relatively strong yen. USDJPY is currently being traded near the 7-week low. Investors fear that if the rate falls below 110 yen per dollar, many companies will lower their profit forecasts in the second half of 2017. Today, an additional negative for the market was the message of the Japanese soft drinks manufacturer Kirin Holdings. It raised the forecast of annual profit by 4.1% – less than expected. Kirin Holdings stocks fell by 4.5%. The stocks of Lion toothpaste manufacturer decreased by 6.7% after its profit coincided with the forecasts.
OPEC increased oil exports to the highest
The prices of Brent oil are down on Friday. The OPEC total export in July increased by 370 thousand barrels per day (BVD) and amounted to 26.11 bpd. This was mainly due to the sale of Nigerian oil, which, alongside with Libya, was not included in the agreement of production limitation. Recall that since early 2017, OPEC and independent producers have reduced the oil production by 1.8 mln bpd. This agreement will be valid until Q2 of the next year. An additional negative factor for the prices was the increase in oil production in the US to 9.43 bpd, which is the highest since August 2015 and is by 12% higher than last year’s level.
Source: Market reports