Investors reacted to the corporate information - 15.7.2014

The growth of the global stock markets continued on Monday. There was no any important macroeconomic information. Investors reacted to the corporate news. Reporting of the Citigroup bank was better than the preliminary forecasts, and its shares rose by 3.7%.

Let us note that before this they had fallen by 10% compared to the price at the beginning of the year, which is much worse than the S&P 500 index dynamics, which increased by 7% during the same period. Earlier Citigroup was fined $7 billion for violation of trade conditions on mortgage bonds. Yesterday trading volume on the U.S. exchanges was 11% lower than the monthly average. Generally the current week will be full of both macroeconomic and corporate information from the United States. Fifty nine companies from the S&P500 list will report. The total yield of all 500 companies is expected to increase by 6.2% in the second quarter of this year compared to the same period of last year. Today, in particular, Goldman Sahcs, Johnson & Johnson, JPMorgan Chase will release their reports before the beginning of trades will report, and Intel and Yahoo!- after the trades are closed. At 12-30 CET macroeconomic information on retail sales, export and import prices for June and the NY Empire Manufacturing for July will be released. At 14-00 CET factory orders for May will be released, and the important speech of the Fed’s Chairman, Janet Yellen, will be held. In our opinion, the overall prognosis is positive. However, the U.S. indices have been rising within 2 days. Yesterday even Dow updated its historical maximum again. Now the U.S. index futures are neutral, but European stocks are corrected downwards.

The EU stocks rose within the global trend yesterday. Industrial production in the EZ for May coincided with the forecasts. Shares of the Portuguese bank, Banco Espirito Santo have fallen by 8%, but investors do not pay attention to it, as its financial problems do not provoke a banking crisis in Europe yet. Today, at 8.30 CET, the inflation data for June will be released in the UK and at 9-00 CET - German ZEW economic confidence index for July is expected to be published. We believe that the preliminary forecasts are negative. Besides it, the ECB representatives made a number of statements that the strong Euro is hurting the European economy. This had a negative impact on investors’ sentiments.

Nikkei is rising for 3 days in a row. Market participants ignored weak economic data on orders for industrial equipment and real estate market. They reacted positively to the statement about the extension of the BOJ monetary stimulus. Its head, Haruhiko Kuroda said that in case of deterioration of macroeconomic indicators, the Bank of Japan can take additional monetary easing measures. Recall that his aim is to reach 2% inflation. The GDP growth within the fiscal year 2014/2015 should not be less than 1%.

The Copper slightly corrected downwards before Chinese GDP release for the second quarter. It will appear early in the morning at 02-00 CET. The GDP growth is expected to remain at 7.4%, the first quarter level. At the same time the information on retail sales and industrial production for June will be released. According to the forecasts, it may be positive for commodity futures. China is the world's largest consumer of raw materials. Recall that the Copper prices have been increased by 9% from the June low, formed due to investigation concerning loan conditions secured by metals in the Chinese port of Qingdao.

The Grain prices fell slightly today, as according to the U.S. Department of Agriculture (USDA), this year the growth conditions of these cultures are the best for the last 20 years since 1994. The Ministry publishes the corresponding cultivation rating. The results of the sale of state reserves of soybean in China added an additional negative. Only 17% of the claimed volume was managed to realize on it or 59.7 thousand of tons at $650 per ton. This is considerably lower than it was at the previous trades (95.6 thousand tons). Since the beginning of May, 1.59 million tons of soybeans were already sold out of the Chinese government reserves in the domestic market.