World stock indices climbed on Friday

World stock indices climbed on Friday. The third hearing of the US Q2 GDP upped from 4.2% to 4.6%. This is the most significant economic growth in two years and a half. Amid the Europe and Japan stagnation, the US indicators look even more impressive. By the way, this fact explains the euro and yen weakening against the US dollar. 

Let us remind you that the US Q1 GDP tumbled 2.1%, due to extremely cold winter weather. The majority of investors expect it to add 3.5% in the third quarter. On Friday the additional positive factor can be considered the increased Consumer Confidence Index, calculated by the University of Michigan, which hit the 14-month high. The US economic data not only pushed the stock market upward, but also contributed to the continuation of the dollar strengthening. Since early July, as the positive statistical data started to be released amid the Fed QE3 reduction, the dollar index has already risen 7.5%. Last Friday Nike stocks, the world largest clothing manufacturer, boosted 11% following the strong quarterly report. Gross profit margin or return on sales (ROS) of the company increased from 44.9% to 46.6%. On Friday the trading volume on US stock exchanges was 15% lower than the monthly average and amounted to 5.2%. 

It should be noted that according to the data released at the end of last week, the Dow slipped 1%, S&P500 decreased 1.4% andNasdaq – 1.5%. Now the futures on these indices are traded considerably downward, and meanwhile it rules out the possibility of the Friday growth continuation. Today the August data on Personal income and spending is to be released at 12-30 СЕТ in the United States. The outlook is positive. The Fed representative Charles Evans will be giving his speech at 13-00 СЕТ. Pending Home Sales in August is to be published at 14-00 СЕТ. The forecast seems to be negative. As we can see, there is a lot of contradictory information for financial markets today.

European markets rose on Friday as the euro weakened. Investors were actively buying bank stocks in the belief that they will be the first to benefit from the expected ECB easing of the monetary policy. Currently, there is a slight price drop on the European exchanges. Amid the political unrest in Hong Kong, the stocks of such European companies and banks with a large share of business in the region as HSBC and Standard Chartered declined. Among them are such luxury goods manufactures as Cartier and Richemont. Note that Hong Kong’s Hang Seng Index tumbled almost 2%. It had a negative impact on other emerging markets. Most ADRs on Russian stocks have returned to long-term “technical support levels”. Today Consumer Confidence index is to be released at 9-00 СЕТ in the EU, at 12-00 СЕТ – the German CPI for September. In our opinion, the outlook for both indicators is negative.

Nikkei indicates minor fluctuations near the 7-year high. There is a possibility that market participants expect the important economic data release. Tonight the data on unemployment in August, industrial output and retail sales will be released at 23-30 СЕТ in Japan. Tomorrow morning at 4-00 and 5-00 CET car sales and a number of indicators of real estate market will be published. In our opinion, the tentative forecasts are negative. However, the weakening yen could provide support for Nikkei. Note that this week various Japanese economic data will be released almost every day.

Cocoa prices jumped, following the persistent Ebola outbreak in West Africa, where 70% of the cocoa bean world production is located. According to the International Cocoa Organization, due to increased demand for chocolate in Asia, the percentage rate of inventories relative to consumption fell to its lowest level since 2010. 

Wheat prices ticked up slightly. The USDA APHIS (Animal and Plant Health Inspection Service) found the wheat crops in Montana, owned by Monsanto Company and containing unauthorized genetic material. This is the second time it happens. Recall that last year when APHIS found unauthorized genetically modified wheat crops in Oregon, South Korea and Japan temporarily cut all imports of American wheat until the end of the more detailed investigation. This affected the world market prices. However, Monsanto representatives stated that the new crops, in theory, would not affect the American grain exports.