The price movements in global equity markets have been minimal on Friday. Since the American Stock Exchanges were not working due to the holiday (Independence Day) in the USA. Today and tomorrow, we will not see any significant macroeconomic information from the U.S.. However, there is the eighth season of the U.S. corporate reporting for the second quarter beginning in July. The first among the large companies will be Alcoa with the financial information(after the trading is closed).
The IMF chairman, Christine Lagarde said about the possible of the world economic growth forecast reduction in 2014. Now it is 3.6% and 3.9% in 2015. This morning, the U.S. futures and European stocks are in the red. Industrial production in Germany for May decreased by 1.8% compared with April for the third consecutive time. This is the biggest drop in more than two years. Note that the GDP growth in the EU in the first quarter was 0.2%, while German GDP was 0.8%. This country is a locomotive of the European economy. German industrial production decline is a significant negative factor for the stock market. At 8-30 CET we will see the EZ consumer confidence index for July from Sentix. The outlook is negative, this figure is expected to fall to a minimum of ten months. Tomorrow morning, at 6-00 CET it will be announced about German foreign trade figures for May. In our opinion, the forecast can be negative for financial markets.
Nikkei fell today along with European stock indexes. The trading volume has been minimal over the last month, at 20% below the average for the 30 days. Tonight at 23-50 CET, we will see the economic data from Japan such as the trade balance for May and the interbank lending rate for June. We believe that the preliminary forecast is negative. However, the data are unlikely to greatly affect investors. Most likely they will wait for the statements of the BOJ deputy, Hiroshi Nakas, which will take place tomorrow at 3-45 CET. At 5-00 CET, we will see the Japanese Economy Watchers Survey report. It is expected to be positive. In our opinion, the stock market in Japan still has good support. Since the Prime Minister Shinzo Abe has recently suggested that the Government Pension Investment Fund has to increase the investment in shares. This state pension fund assets are amounting to $1.24 trillion.
The Cocoa prices fell after the European Cocoa Association released a forecast indicating that the cocoa processing this season in Europe would grow only by 2% compared to last year and reach 310.2 thousand tons. Note that within 12 months the Cocoa prices have risen almost by 45%.
The Sugar price fell after the China Sugar Association reports saying that its domestic sales declined by 24.3% compared with the previous year to 7.9 million tons.
The Coffee price grew up slightly. Its reserves in Vietnam were minimal for two years in June and accounted for 15% of the crop or 252 tons. In June last year, they accounted for 18% or 263 thousand tons. Coffee production in Vietnam is expected to decline in this season by 4% compared to last year, to 1.65 million tons. The Volcafe company forecasts the coffee deficit on the world market at a rate of 96 tons for the next season. It may increase in case of El Niño negative influence in September.
The Copper price is corrected downward today. Since its stock on the London Metal Exchange rose last week by 0.9% for the first time in the last 14 weeks. Industrial production declined in Germany. Note that last week the price growth was the highest since last September. Indonesia still does not export copper. The Chilean Codelco, state copper company announced the suspension of a number of projects due to a lack of funding. Note that the Ernst & Young company expects the copper deficiency in the global market since 2016. In its opinion, the cost of the metal will increase to $7,500 per ton, so the development of new fields makes economic sense.
The palladium price peaked On Friday since February 2001 on the strong demand for the U.S. and Chinese automakers. The palladium is used as a catalyst.