19.05.2014 - Drop in iron ore prices pulls down the Australian market

Major U.S. stock indexes increased slightly in the last trading session of the week. The reason for optimism has become the strong housing data. Thus, the number of housing starts rose to the highest level in five months - 1.07 million against the forecast of 0.98 million, due to postponed demand, which arose in connection with an anomalously cold winter in North America. Despite this, the consumer confidence index in May fell to 81.8 against the forecast of 84.7. Today is not expected the release of important macro. Considering the end of the season of corporate reporting and the lack of new drivers for growth, we expect the market correction and keep a long-term negative outlook on the U.S. indexes.

European stock indexes practically have not changed by the results of the previous trading session. The German market fell slightly, due to the growth in the trade surplus in the euro area by only 0.2 billion to 15.2 billion, with an expected growth to 17.3 billion. Tomorrow the course of trading can be influenced by the data on the balance of payments in the euro area. We maintain a long-term negative outlook for European indexes, and expect continued downward correction.

Markets of the Asia-Pacific region are down against the weakness of the construction sector in China, where real estate prices continue to fall. Decline on the Japanese market is explained by weak corporate reports and the strong yen. Australian stock market continues to fall due to lower spot prices for iron ore to a level slightly above 100 dollars per ton. Tonight we should pay attention to the data on the index of leading economic indicators in Australia and the index of business activity in Japan. We maintain a long-term negative outlook on the stock indexes in China, Japan and Australia.

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