The growth of the world's stock markets generally continued on Thursday - 23.5.2014

The growth of the world's stock markets generally continued on Thursday. This was aided by good macroeconomic data from the United States. Sales of homes in the U.S. secondary market in April rose by 1.3% to 4.65 million, almost as it was expected.

Compared to the July peak, the sales volume was lower by 15% and in comparison to April last year - less than 6.8% . However, this growth rate was accepted positively by investors because it is only the second increase in home sales for the last 9 months and the first for this year. The secondary real estate sales for March generally have been minimal since July 2012. Note that now number of houses for sale in the United States is the highest for the last 2 years. An additional positive leading factor was the leading indicator increase in April by 0.4% and the manufacturing activity PMI growth from the Markit private agency to 56.2 points. This is more than expected. The new figures on the weekly U.S. jobless claims slightly exceeded forecasts, but it is still around the 7-year lows. The round turn on the U.S. exchanges yesterday was 5.1 billion shares, or 13.5% less than the average monthly level. Today, we will see the new home sales data from the United States at 14-00 CET. In our opinion, the preliminary forecast is positive.

The European stock indexes show slight fluctuations near the 7-year highs. They grew up in anticipation of rate cuts by the ECB. Now investors' activity decreased before the European Parliamentary elections, which will be held in all 28 EU countries before the end of the next week. This Sunday, we also expect a presidential election in Ukraine, which borders with the EU. IFO business climate index coming out from Germany was negative this morning. It slightly retarded the growth of European stock indexes. Any other significant economic information in the EU is not expected to come out today.

The Japanese Nikkei index rose for the third consecutive day and reached a maximum of 4 weeks. There were no new positive factors. As we mentioned in previous reviews, the increase Japanese stocks is contributed to: the BOJ refusal to increase the emission and weakening of the Yen (USDJPY), the PMI growth in Japan and China, the positive dynamics of the U.S. stock market. Note that early, on Monday morning, we will see the BOJ April meeting minutes and the speech by Kikuo Iwata at 7-00. This can affect the Yen and Nikkei.

The Cotton prices markedly decreased. Meanwhile, according to the USDA, China bought the maximum amount of cotton of last 2 years last week, at 269.3 thousand bales. One bale weighs just over two centners. Total exports of cotton from the U.S. last week rose by 66.9 thousand bales and totaled 360 thousand bales. In the previous reports, we noted that a drop in cotton prices due to its sale of the Chinese government reserves. Chinese factories can import 1 tone for every 4 tons of purchased reserves. Probably, the increase in purchases of U.S. cotton indicates a higher demand than expected.

The Natgas prices fell down due to the increase in its reserves in the United States this week to 106 billion cubic ft., more than expected. Meanwhile, Russia agreed to supply gas to China in the annual volume of 38 billion cubic meters at $350-380 per thousand cubic meters within 30 years. This is about twice as expensive as the gas price in the United States. And the final quotations of Russian gas could be even higher, as they will be tied to the world Oil prices. Some market participants believe that the price of Russian gas, exported to China， may become a new benchmark for the global market. In this case, we can not exclude Natgas futures growth.

The grain futures fell earlier because of rain in the United States, where the drought was previously observed. Now, in our opinion, the quotes will affect the supply and the demand. The Soyb start to rise in price due to the first statement from the USDA of selling 615.6 tons last week, including 164.4 thousand tons of the old crops. This is the maximum amount for the last 9 weeks. The demand has increased due to Chinese purchases. According to the USDA forecasts, China purchases 5.1 million tons of U.S. soybeans during the current season.