U.S. stock indexes continued to fall on concerns about financial stability in the euro area, which was caused by the news about problems with large Portuguese bank Banco Espirito Santo, which may declare a default. Following a statement by the central bank of Portugal regarding the reliability of the bank, investor sentiment improved. Also yesterday, was published the positive data on reduction of the number of initial unemployment claims in the U.S. to 304 thousand, that is 12 thousand better than expected, as well as slowdown in wholesale inventories growth to 0.5% in May, which is 2 times less than in April. Today we should pay attention to the report on the U.S. federal budget (18:00 GMT).
Decline of European stock indexes accelerated in connection with the problems of one of the largest banks of Portugal, that has failed to make payment on the bonds. The situation improved after the statement of the central bank of Portugal, about the reliability of Banco Espirito Santo. Negative for the market have also become the news on the fall in industrial production of France by 1.7% and Italy by 1.2%, although in these countries is projected the growth by 0.5% or more. UK trade deficit grew by 0.4 billion to 9.2 billion. The course of trading today can be affected by the data on the index of leading economic indicators of the UK (09:00 GMT). Medium-term outlook for European indexes remains negative.
Volatility on the markets of the Asia-Pacific region today was quite low. The Japanese market fell on the background of deteriorating of earnings forecasts of largest clothing retailer of Japan Fast Retailing Co., As well as a sharp strengthening of the yen against the background of the problems in the financial sector in the Eurozone. The Chinese market is still under the pressure of the weakness of the construction sector, and in Australia, government bond yields fell below the RBA interest rate (2.50%). We maintain our negative medium-term outlook for the markets in the region, but the Japanese market can be supported by continued devaluation of the yen.