European indexes kept falling and the rest of them rose


On Wednesday the world stock markets had no sharp trend observed. European indexes continued to decline, and other indexes rose. The U.S. investors focused on good corporate news and ignored the weak economic data.

Shares of most of pharmaceutical manufacturers rose on the news from Bristol-Myers Squibb about continuation of testing a new medicament for melanoma. Pfizer (PFE) quotations rose by 1,7%, Merck (MRK) rose by 1.6%. Shares of television networks rose due to tighten copyright by the U.S. Supreme Court. The producer of genetically modified seeds, Monsanto announced the redemption of its own shares at $10 billion, and they rose up by 5.1%. The trading volume of U.S. exchanges was 5.7 billion shares yesterday, it is approximately equal to the average monthly level of 5.6 billion.

Economic data from the U.S. were much worse than expected yesterday. The GDP for the first quarter in the third reading has fallen by 2.9%. This is the largest quarterly decline in five years and the maximum difference between the second and third estimates since 1976. As it has been before, the GDP decline explanation was the negative impact of too cold winter weather. Now the U.S. government expects the economic growth in the second quarter by 3% and 2.4% for the whole 2014. That means, it assumes marked acceleration in the second half of the year. Another yesterday indicator - Orders for durable goods in May decreased by 1% while it was expected to grow by 0.5%. Weak statistics had a negative impact on the U.S. Dollar. However, the stock market participants ignored it and bought. Today, we expect the U.S. unemployment rate for this week and personal income – spending at 12-30 CET. In our opinion, the forecasts are positive. At 17-00 CET we will see regional representative, Fed James Bullard’s speech.

The EU had no significant economic data coming out yesterday, and today there are also not expected. The prices decreased due to corporate news. On Wednesday the French government sold a stake to the GDF Suez at 1.5 billion Euro at the lower boundary of the price range. Today the European indexes increased slightly.

Nikkei has grown up thanks to good information on individual Japanese companies. Today, at 23-30 CET, we will see the inflation, unemployment and retail sales data for May. We believe that their forecasts are positive for the Nikkei. Most of market participants expect the BOJ to continue to stimulating the economy until the end of the year despite reaching the inflation target.

The grain futures rose before the USDA weekly report today at 11:30 CET. The data on the U.S. exports may have the greatest impact on the prices. The Corn sales are expected to increase. Its reserves in the U.S. are projected at 3.72 billion bushels, which is the highest in 4 years, the Soyb – at 378 million or at 37-years low, the Wheat - at 598 million, or at 6-years low. The estimate of reserves from the USDA is expected on Monday.

The Cotton prices plummeted to the minimum of one and a half year on the USDA forecasts for its production growth in U.S. by 16% to 15 million bales, compared to last year. The net position on the Cotton at the Intercontinental Exchange (ICE) decreased to 3-year low. While its exchange reserves increased to the maximum of 11 months and totaled 444.6 thousand bales.

The COFFEE prices rose after reports that the largest coffee cooperative in Brazil (Cooxupe) has the harvest at a lower level than expected, due to the drought. By the end of last week, it had already handled 27.5%, while the last year, in the same period, it has been processed only 13.6%. Note that the USDA predicts the world coffee crop decline for the current season by 1%, compared to the last season to 148.7 million bags. We expected a record demand in the amount of 147.7 million bags mainly because of the United States and Russia. This situation may lead to a significant decline in world coffee supplies before the next growing season to a minimum in 2011 - 32.1 million bags.

The COPPER price has risen thanks to the cumulative reduction of its stocks on the London, New York and Shanghai exchanges by 51% compared to last year, to the lowest level since October 2008.


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