Trade Wars And The Markets
IFC Markets | Jul 11, 2018 10:12AM ET
The S&P 500 stock index ended higher at the maximum since February 1, 2018. Good corporate reports of PepsiCo (NASDAQ:PEP) for the 2nd quarter were the main reason for this.
Investors also bought other stocks of the consumer sector. Procter & Gamble Company (NYSE:PG) stock prices rose by 2.5%, and Coca-Cola Company (NYSE:KO) stock prices - by 1.3%. This morning, US stock index futures fell significantly amid rumors that the US would approve another package of prohibitive duties against Chinese goods in the amount of $200 billion. Earlier, US President Donald Trump signed the introduction of duties against China in the amount of $34 billion. This week, investors will focus on corporate reports of the US companies. On Friday, the major banks JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) will report earnings for the 2nd quarter. Today at 14:30 CET, the producer price index for June will be published in the US. Data on wholesale inventories for May will come out at 16:00 CET. It is expected that the indicators will be positive and this supports the growth of the US dollar index.
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Investors ignored the negative economic data in Germany as the ZEW Survey of German economic sentiment for July dropped. Market participants did not pay attention to this, but, today, European stock indices opened with a noticeable decline of almost 1% amid the possible strengthening of the US-China trade war. An additional negative was the message about losses of the online stores operator Ocado (LON:OCDO). Today, ECB President Mario Draghi is expected to deliver a speech, which may affect the euro.
h3 The Nikkei Grew With Other World Indices, But Dropped Today/h3On Tuesday, the information on the merger of oil companies Idemitsu Kosan and Showa Sekiyu contributed to the increase in the Japanese stock index. Their stock prices rose by 12.6% and 9.7% respectively. Showa Shell (LON:RDSa) stocks will be delisted on March 29, 2019. SoftBank Group Corp (OTC:SFTBY) announced the purchase of Yahoo (NASDAQ:AABA) Japan stocks for $2 billion and they rose by 11%. This morning, Nikkei 225 collapsed along with other world indices because of the rumors of new US sanctions against China. Stocks of Japanese companies, connected with the Chinese market, fell the most. In particular, they are ocean carriers Mitsui OSK Lines Ltd ADR (OTC:MSLOY) and Nippon Yusen K.K (T:9101), as well as manufacturers of construction and other equipment Komatsu Ltd. (T:6301), Hitachi Construction Machinery Co (T:6305), Okuma Corp. (T:6103) and Makino (T:6135). Good economic data on the growth of industrial orders in May published this morning slightly supported the Japanese market. The yen exchange rate slightly strengthened amid disagreements between China and the United States. Probably, investors consider this as a defensive asset.
h3 Brent Is Falling By More Than A Dollar/h3
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The U.S. Energy Information Administration published a forecast that oil production in the US will exceed 12 million barrels per day by the end of the next year. Meanwhile, market participants expect a 4.5 million barrel drop in US oil inventories over the past week. Therefore, it is still difficult to say how long the price decrease will continue. Data on US oil reserves will be published today at 16:30 CET.
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