16.06.2014 - ​Geopolitical tension puts pressure on the markets

The last trading session of the previous week ended with a slight increase in the major U.S. stock indexes. Positive message for the market was the increase of earnings forecast from Intel. At the same time, investors were concerned about the situation in Iraq, where the government has lost control over the regions in the northern part of the country. Furthermore, it became known that the consumer confidence index fell to 81.2, with an expected growth to 82.2. Today we should pay attention to the growth of industry (13:15 GMT) and the index of business activity in the housing market in the U.S. (14:00 GMT). We expect a decline of U.S. indexes in the medium term.

May 2 , 2014 USSPX Graph

European stock markets mostly fell on Friday amid hostilities in Iraq. Consumer price index in Germany showed a decline of 0.1% in May, and the Eurozone trade surplus in April rose by 0.1 billion less than expected and made 15,8 billion. Today is expected the continuation of the downward movement on the stock markets of Europe. Among the statistics today we should pay attention to consumer inflation (09:00 GMT). Due to the increasing geopolitical risks we maintain a medium-term negative outlook for the European indexes.

Markets in the Asia-Pacific region the trading week have started rather calmly and have slightly changed. The exception was the Japanese market, which fell against the strengthening of the national currency, the demand for which has increased due to rising geopolitical risks. We expect that in the medium term, the markets of China and Australia will continue to follow the world trends and will decline in the medium term. Japanese market may continue to grow in case of further devaluation of the Japanese yen.

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