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American stocks rise after European stock exchanges closed - 21.8.2014

There was no single trend observed on the world stock markets on Wednesday. The main growth of American stocks was observed after the European stock exchanges closing, when the materials of the July Fed meeting were released in the United States. On that basis investors have decided that the rate hike might happen earlier than expected.

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The Fed pecial attention was paid to the steady recovery of the labor market. This year the monthly average increase of Non-farm payrolls makes 230,000 workplaces. Whereas it was noticeably lower in the pre-crisis period of 2004-2007, and amounted to 162,000. A stable low CPI rate, which does not outperform 2%, can be considered as another positive indicator of the American economy. Now market participants expect the speech of the Fed chair Janet Yellen, which will be given tomorrow, and may contain a further action forecast of the department, depending on the target values of macroeconomic indicators. The data on earnings reports proved to be positive on Wednesday. Home Depot profit for the second quarter upped 5.8% and outperformed the forecasts. Due to this fact, the company stocks hit the historical high, adding 3%. After that other retailer stocks rose in price, including Lowe's Cos – the competitor of Home Depot. Despite the market growth, the volume of trading on the American stock exchanges still remained at 14%, the level below the 5-day average, and reached 4.5 billion stocks yesterday. The US weekly labor market report is to be released today at 12-30 СЕТ, at 13-45 CET - Manufacturing PMI fro August published by Markit, and at 14-00 CET – Existing Home Sales, Leading Index for July, Philadelphia manufacturing index for August. All the current data outlook is considered to be negative, except for Initial Claims, which might be positive. It serves as the main indicator of the current statistics after the Fed materials released yesterday. Due to this, futures on American stock indices are now traded "in the black".

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European stock indices are also rising today, reacting to the Fed positive data. Yesterday they closed neutrally, but it was before the Fed data publication. The positive Q2 earnings report of Raiffeisen Bank International AG contributed to the markets growth. The bank stocks ticked up 5%. However, it should be noted that there is a negative factor that affects the European markets: a slowdown in industrial growth in China and the EU. The Chinese Manufacturing PMI by the HSBC has dropped suddenly this morning. For this reason, the stocks of such mining companies as Rio Tinto, BHP Billiton and Antofagasta were affected in the first place. The Manufacturing PMI and Composite Index for August have declined in the morning in the EU. They are calculated by Markit. The Consumer confidence index is to come out today at 14-00 СЕТ. In our opinion, its outlook is negative.

In the previous overviews we pointed out that the US economy recovery and the plans of monetary policy tightening will contribute to the strengthening of the American currency against the euro, yen, pound and other currencies. The dollar index rose 1.2% over the past four days.

Nikkei has climbed considerably today. Besides the uptrend of other world stock indices, the yen weakening contributes to the Nikkei growth. It makes the business of Japanese exporters more profitable. Nikon stocks added 4%, Honda Motor – 2.3%, Mazda Motor - 2.8%. The next Japanese economy data will be released on next Wednesday.

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Most commodity futures are dropping in price today, due to the negative Chinese economic data. Sugar prices are increasing the second day in a row. Its imports to China have tripled in July, compared to June, and reached 280,000 tons. Market participants believe that China can buy 1 million tons of sugar on the world market in August-October. Total imports in 2014 are estimated to be $3.4 million tons. This is more than expected at the beginning of the year - 2.5 million tons, but less than the last year level of 4.5 million tons.

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