World stock markets: multidirectional movement on Friday - 18.8.2014

World stock markets indicated a multidirectional movement on Friday. The majority of the US macroeconomic data appeared to be worse than expected, except for the car production which proved to hit the 5-year high in July. However, in general for this week the Dow added 0.7%, S&P 500 - 1.2% and Nasdaq - 2.2%.

The main reasons for that were the following factors: the relative situation stabilization in Ukraine, due to Russian humanitarian operation and quite positive quarterly earnings reports of the American companies. The report of the equipment manufacturer Applied Materials facilitated to NASDAQ growth on Friday. Among the world stock indices, only NASDAQ hit the July high. The volume of trading on American stock exchanges turned out to be 16% higher than the 5-day average. There is no US macroeconomic data expected today. Futures on American stock indices are traded “in the black”.

European stocks have risen today in the morning, winning back their fall on Friday. This was contributed by the temporary stabilization of the political situation in Ukraine, due to the humanitarian aid provided by Russia and negotiations. The announcement of the BHP Billiton mining company reorganization can be considered as an additional positive factor. The company’s stocks rose 1.2%. This triggered off a rise in quotations of the other companies in this sector as well, including Rio Tinto (+ 0.9%). The EU trade balance for June is to be released at 9-00 СЕТ today. The forecast seems to be neutral.

Nikkei repeats the European indices trends. It is increasing today, due to positive corporate reports. Chugai Pharmaceutical stocks boosted 15% after the authorized share capital of 40% being bought back for $10 billion of a European company Roche Holding AG. Nintendo quotes climbed 4%, due to successful sales of the new game «Mario Kart 8" in the United States and applications for iPad planned to launch. Japanese macroeconomic data will be released early tomorrow morning from 5-00 to 6-00 CET: Coincident Index, Leading Index, Department Store Sales and Machine Tool orders. In fact, these are not the most important indicators in comparison with the data on Japan foreign trade in July, which will be also announced tomorrow, but late at night.

Wheat prices slipped slightly. Investors had a positive reaction on the political situation easing in Ukraine. Note that, together with Russia, the two countries provide a fifth part of the world wheat exports. The price drop was also affected by the rain in New South Wales, Australia. Earlier, the most severe drought since 2002 was observed there. According to the Australian Government forecast, the wheat crop in 2014/2015 reduced to 24.6 million tons compared to 27 million tons a season earlier.

Volcafe Ltd is expecting a shortage of "Robusta" coffee in the amount of 1.6 million bags or 96,000 tons in 2014/2015. However, it did not affect strongly the quotes, as this forecast may prove to be wrong. In recent days the rainy weather in Vietnam is a favorable factor for the coffee ripening. The crop gathering starts in October. The global coffee shortage could reach 10 million bags, according to International Coffee Organization forecast. The main reason for this is the drought in Brazil. The largest Brazilian coffee co-operative Cocatrel expects the harvest to lower by 40% in 2014, to 900,000 bags compared to 2013.

Sugar prices ticked up slightly. There was a flood in Uttar Pradesh, the Indian state, a major producer of sugar cane in the country. A possible damage to the sugar crop has not been announced yet, but it is known that about twenty people being killed. Let us remind you that according to Indian Sugar Mills Association forecast, the sugar production in India is to grow 4% in 2014/2015, to 25.3 million tons compared to the previous season.