US stocks release strong quarterly earnings - 13.2.2017

US stock indices hit historical highs once again

US dollar index edged higher on Friday together with US stock indices. Investors shrugged off the weak Michigan University consumer confidence index for February which fell more than expected. Markets reacted positively on the meeting of US president Donald Trump with the Japanese prime-minister Shinzo Abe.

The additional positive came from the US president who promised to release the economic program within 2-3 weeks. By the end of previous week 70% of S&P 500 components have already released the earnings for Q4 2016. Total earnings of S&P 500 constituents may rise by 8.4% which may become its record increase since Q3 2014. On Friday, the US energy and financial sectors rose most. This happened on advancing oil prices and news on possible reelection of some Fed directors. US stock indices continued rising on Monday while US dollar was almost unchanged. Donald Trump refrained from strong statements on economics during his meeting with Japan’s Prime Minister Shinzo Abe which investors considered positive. Fed Chair Janet Yellen will speak on Tuesday in US Senate and she may clarify some aspects of monetary policy. The chances for the Fed rate hike in the next meeting on March 15, 2017 are being 22.5%.

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Greek risks accompany the French risks of presidential elections

Euro edged lower on Friday while European indices rose slightly. No significant economic data came out in Eurozone. Single currency continued weakening on higher political risks in France and economic risks in Greece.

According to polls, the National Front leader Marine Le Pen, who advocates for referendum to leave the EU, is the front runner in the election. The first round of the elections is to take place on April 23, 2017 while the second – on May 7. The economic problems of Greece are connected with the need to get the next tranche of IMF financial aid. The fund has not yet decided on the budget surplus required from Greece. The probable range is 1.5%-3.5%. The higher the surplus is the more Greece will need to cut social spending. This may raise social tensions in Greece. The European stock indices rose on Friday on positive quarterly earnings from ArcelorMittal and other companies. No significant economic data came out on Monday in EU. Stocks continued advancing while euro was almost flat.

Nikkei advanced as Trump and Abe met

Nikkei rose on Monday for 3rd straight day as yen weakened. Moreover, investors continued playing off the results of the US President meeting with Japan’s Prime Minister Donald Trump that brought no negative surprise. Yen weakened on Monday for the 3rd straight day on weak economic data. Japanese GDP rose in Q4 2016 less than expected.

OPEC production cuts are compensated for with higher US rigs count

Oil prices continued fluctuating within the neutral trend. They rose in the end of last week and slightly fell on Monday. The rise was after OPEC said it would cut oil production by 1.16 thousand barrels per day in January to 29.888mln bpd. Thus, the cartel has fulfilled its obligations by 93%. OPEC slightly raised the global oil demand forecast in 2017 to 1.19mln bpd. Now it expects no excess oil in the market although it was previously estimated to be 985bpd. Prices fell on Monday on Baker Hughes data. Rig counts rose by 8 last week having reached the high since October 2015 of 591. Their monthly increase in January was the record since 2012.