18.06.2014 - Further progress will depend on the Fed statement
U.S. stocks finished yesterday's trading session with a slight increase. In the center of attention was the data on the consumer price index, which rose in May by 2 times more than expected and made 0.4%. This fact brings closer the moment of rising interest rates by the Fed. Also, it is worth noting that housing data disappointed investors. Number of housing starts in May fell to 1.0 million, 0.04 million worse than expected, and the number of construction permits fell to 0.99 million vs. expected 1.07 million. Traders will not rush with actions before the announcement of meeting results of the Federal Open Market Committee of the U.S. Federal Reserve. Program of quantitative easing is likely to be reduced by $ 10 billion to $ 35 billion. In connection with the weakness of the bulls and the lack of new drivers for growth we expect a decline of the U.S. stock indexes in the medium term.
European stocks rose yesterday against moderate optimism of investors in the United States. Growth is constrained by geopolitical tensions and permanent tension between Russia and Ukraine. At this time the cause of the conflict was a contract for the supply of natural gas to Ukraine, moreover yesterday exploded one of the largest pipelines in the country, increasing fears of a supply of natural gas to Europe. According to our estimates, before the end of the summer, we'll probably see a correction on the stock markets of Europe.
Markets in the Asia-Pacific region increased mainly due to the data of slowing decline in prices in the Chinese real estate market to -0.15% in May compared to the previous month. The Australian market dipped slightly, but continues to be under pressure from lower prices for iron ore. The devaluation of the yen once again supported the Japanese stock market, which today was among the top gainers. We expect the current trends in the medium term, with a moderate rise in the Japanese stock market and the fall in China and Australia.