Investors ignore data on US Retail Sales in July


World stock markets had no single trend on Wednesday. In general, the markets are trying to restore the growth after the downward correction in late July. Investors ignored the data on the US Retail Sales in July, which proved to be the weakest since this January. This favoured the stock reduction of such retail chains as Macy's Inc (-5,5%), Kohl's Corp (-1,5%), Nordstrom Inc (-0,9%), Wal-Mart Stores (-0,3%).

It should be noted that Nordstrom and Kohl's plan to publish their earnings reports for the second quarter today, and probably some other retailers. A considerable increase in American stock indices yesterday was provided by the companies of the biotechnology and computer sectors. The EU approved the use of a new drug for cystic fibrosis Kayldeco, manufactured by Vertex Pharmaceuticals. This facilitated the growth of its stocks by 4%. After that, the stocks of other pharmaceutical companies became to rise in price, as well as of other high-tech sectors. Biogen Idec quotes rose 3%, Google - 2.2%. However, the activity level of market participants still remains low. The volume of trading on the US stock exchanges on Wednesday was 18% lower than the 5-day average and reached 4.7 billion stocks. Weak earnings report of Cisco Systems came out after the trade closing; it caused a slump in its stock prices by 3% in the OTC markets. Currently, futures on US stock indices are being traded “in the red”. The weekly US labor market report is to be released today at 12-30 CET and export/import prices for July. In our opinion, the preliminary forecasts prove to be positive. The expected quarterly reports of retailers are also important for the market.

European stocks yesterday ignored the negative data on the EU industrial production in June. They climbed up due to positive quarterly reports of E.ON and Swiss Life. Another part of macroeconomic statistics has been announced this morning; it appeared to be negative again. The GDPs of France and Germany for the second quarter were worse than expected, according to the forecasts. The German economy reduced qoq for the first time since 2012. After that European stock indices began to drop. Especially that the EU GDP for the second quarter is to be released today at 9:00 CET. It may disappoint investors who expect it to increase to the first quarter level (+0,2% or +0,8% yoy). At the same time, the CPI data for July is to be published, but its outlook is relatively neutral.

Nikkei showed a slight downward correction today, along with the other world indices. Technically, it went back to its neutral trend which has been preserved for two months. Economic data on factory orders, which went out last night, appeared to be negative and considerably worse than expected. However, it did not affect the market greatly, as investors expect purchasing stocks of the Japanese Government Pension Investment Fund, managing assets of $1.2 trillion. It was going to increase its stake in the portfolio, as announced earlier. The volume of trading on the Tokyo Stock Exchange is still maintained low. Yesterday it was 10% below the month average.

Copper prices continued to fall today amid the concerns on Chinese demand reduction, due to a possible economy slowdown. Premia and expenses for this metal on the London Metal Exchange fell to its lowest level since last June and amounted to $70 per ton. Some market participants predict the copper excess of 226,000 tons on the world market this year, and in 2015 – 285,000 tons. Copper shortage of 193,000 tons was observed on the world market in 2013, according to International Copper Study Group data, and prices dropped as a result. It should be noted that China consumes approximately 40% of the world copper produced. In July the reduction in country supplies happened for the third month in a row and reached 2.9% compared to June. The volume fell to the lowest level since April 2013 and amounted to 340,000 tons.

Gold futures are rising in price for the third consecutive day amid the global political crisis in Ukraine and the Middle East. The trade volume is 18% lower than the 3-month average. Meanwhile, the world gold demand reduction for the second quarter by 16% was reported by World Gold Council, to 964,000 tons due to the falling trade volumes of jewelry in the world (by 30%) to the lowest level since the fourth quarter of 2012, and due to demand drop on bars and coins by 56%. So according to the company forecast, the gold demand in India this year could be reduced by 13%, compared with 2013, or to the low of 2009 and be equal to 850,000 tons. Let us remind you that it amounted to 578.5 tons in 2009.


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