01.08.2014 - The default of Argentina forced traders to fix the positions
US stock indexes accelerated decline amid reports about the default of Argentina, which may lead to deterioration of the situation in other emerging markets. Argentina has defaulted for the second time in 13 years. In addition, investors were disappointed by the financial performance of Whole Foods Market Inc. and Kraft Foods Group Inc. Today the course of trading will depend on the data on the labor market (12:30 GMT) and consumer confidence (13:55 GMT). Reduction of quantitative easing program and anticipation of speedy lifting of interest rates leads to a deterioration in sentiment on the market, in addition, many investors are taking profits after a strong growth of American indexes since the beginning of the year. We maintain a negative medium-term forecast and recommend holding short positions on futures on indexes.
European stocks continued to fall on the background of Argentina's default, as well as concerns about the impact of sanctions against Russia for the EU economy. About 40% of companies of STOXX Europe 600 index have already reported and over 55% of have met analysts' expectations and showed the best results. Data on inflation in the euro area also disappointed investors. Thus, the rate fell to 0.4% in July, which is 0.1% less than in the previous month. Today we should pay attention to the manufacturing PMI in the Eurozone (08:00 GMT). The mood on the market today is negative, but at the end of the day we can see the fixation of short positions. The medium-term outlook remains negative.
Markets in the Asia-Pacific region are falling following the American indexes. The reason for the fall was both of Argentina's default, and statistics from the region. Japan manufacturing PMI fell to 50.5 in July which is 0.3 worse than the forecast. The similar indicator from the HSBC bank in China also fell by 0.3 to 52.0. Considering the fact that a default of Argentina's increased the fears of investors about investing in emerging markets, we expect further downward movement of indexes in the region.