Markets closed as US celebrate Martin Luther King Day - 19.1.2015

Friday was marked by growing quotes on international stock markets. The Michigan consumer sentiment index in January outstripped forecasts and suddenly reached 98.2 points, renewing its 11-year maximum. All the other American macro-economic data also appeared to be positive. The month to month inflation rate in December decreased by 0.4% (this has become the maximum decline since December 2008). CPI yoy in December slipped to the lowest level since October 2009 and made up 0.8%. This is far lower than the Federal Reserve System target level of 2%. The data strengthen the expectations of the refinancing rate to be increased this year. Please note that though industrial output in December was comparatively weak, they met the target. Despite the upturn on Friday, the Dow Jones, the S&P 500 and the Nasdaq indices fell by 1.3, 1.2 and 1.5 percent respectively, drawing the weekly balance. Earlier, investors responded negatively to the decrease in retail sales and, as fairly, to GDP forecasts. American stock markets turnover was 4% above the 5-day average and made up 7.7 billion shares. Today American exchange markets are closed due to the American public holiday, Martin Luther King Day.

Today European stock indices continue to grow at the prospect of 500-550 billion euro emission which is likely to be announced on Thursday at a regular session of the European Central Bank. As exchange markets are closed and Thursday is still far ahead, the European Union observes a rather weak share price growth. Significant macroeconomic data are not expected to be published today. On Friday euro hit a new 11-year low as a result of the National Bank of Switzerland decision we had written about in our previous overview. Today the European currency is slightly moving up. We believe that until the next ECB meeting takes place, euro is likely to be traded sideways.

Nikkei has risen this morning together with other world stock indices. It was partly encouraged by the growth of the Japanese consumer confidence marker in December, which slightly outstripped forecasts. JPY/USD slipped in expectation of the Bank of Japan meeting (which is to take place January, 20-21). Investors anticipate the positive forecast of the core inflation rate for the current year, which is likely to decline from 1.7% predicted in October to 1.5%. Herewith, on Wednesday morning the Bank of Japan holds the final press conference and may declare the augmentation of emission and the raised GDP forecast. Analysts do not expect any particular macroeconomic data concerning Japan to be announced tomorrow.

Chinese officials will publish a report on GDP for the fourth quarter along with industrial production and retail sales data in December. In our estimation, forecasts are negative. There is a risk that the GDP growth will not meet the Chinese government’s expectations or even reaches its 24-year low. In this case, commodity futures prices may drop.

As we assumed in our previous overviews, oil and gold prices continued to grow. According to Baker Hughes, the oilfield services company, the number of US-based oil wells reduced by 55. This reduction is the second biggest within 24 years and has already been the sixth one in a row. We recall that the week earlier this number of oil wells decreased by 61. At the moment, there are 1366 operating oil wells, their quantity has been at its minimum since October 2013. We suppose that the rundown in drilling is absolutely logical. When oil price had fell by almost 60% within 6 months, the majority of oil fields became unprofitable. The dwindling number of wellsites may result in oil output declining and the price increasing. According to the U.S. Commodity Futures Trading Commission, the number of net long positions for WTI crude oil rose by 12% last week.

Gold hit its 4-month high at the prospect of the expected euro printing. The SPDR Gold Trust weekly reserves gained 1.9% and made up 730.9 tons. This has been the max growth since May 2010.