European stock indices and the Japanese Nikkei drop for the 4th consecutive day

August 10, 2017

By IFCMarkets

Investors expect economic and corporate news

At the end of the trading session American indices discounted a significant part of the losses

The increase in political risks due to the worsening of the relations between the United States and North Korea caused a decline in the US stock indices on Wednesday. However, at the end of the trading session, they discounted a significant part of the losses and closed with a lowest decline. This was contributed by the price growth of military product manufacturers Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman. The industrial index Dow Jones U.S. Defense increased by 1.6%. Later, Secretary of State Rex Tillerson said that he did not believe in the existence of an immediate threat regarding the outbreak of hostilities in North Korea. On Wednesday, the labor productivity data for Q2 came out. Its growth exceeded forecasts, but market participants ignored this positive, focusing on political news concerning the DPRK. The US dollar index slightly declined on Wednesday. Today it is growing in anticipation of the publication of the economic information on the producer price index for July at 14-30 CET. The forecast is positive. The futures for US stock indices are currently traded in the red. Investors expect the publication of quarterly reports of NVIDIA, MACY’S, Nordstrom and other companies.



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Investors make profits on euro amid political risks

Today European stock indices are falling for the 4th consecutive day

On Thursday, European stock indices fell for the 4th consecutive day. Yesterday, there were no significant economic statistics, but there was a negative political factor in the Euro-zone. In Paris a car hit a military patrol, which could prove to be a terrorist attack. Today no important European economic data are expected to be published as well. The European stock prices are falling amid the weak quarterly reports by the recruiting company Adecco (-2.5%) and the chemical producer Lanxess (5.6%). The stocks of British companies Anglo American, BT Group, Rio Tinto and Lloyds fell after the records were closed for dividends. The euro exchange rate is gradually decreasing. Since the beginning of the year, it has grown by more than 11% and investors are making profits on the background of the political risks. The British pound updated the 3-week low against the dollar, but later discounted some losses on the background of mixed economic data. Britain’s foreign trade balance for June turned out to be worse than forecasts, while the industrial production index is better.

On Friday, the Japanese financial markets will be closed due to the national holiday

On Thursday, the Japanese stock index Nikkei fell for the 4th consecutive day due to the increasing political tension around North Korea. Note a decrease in the stocks of insurance companies Dai-ichi Life Holdings and T&D Holdings, as well as in the securities of the bank holding company Mitsubishi UFJ Financial Group. Also, the Japanese stock market was negatively impacted by the decline in June industrial orders, which markedly exceeded the forecasts. The yen continued to slightly strengthen, as investors continue to view the Japanese yen as a safety asset. On Friday, the Japanese financial markets will be closed due to the national holiday – Mountain Day.

The Brent price exceeded $53 per barrel

On Thursday, the Brent price rose exceeding $53 per barrel and updated a 3-month high. Saudi Arabia announced a 10% drop in oil shipments to the Asian consumers in September 2017. The US oil reserves have fallen to the lowest since October last year. Over the past week, they declined by 6.5 mln barrels, which is much worse than the forecast of minus 1.5-2.7 mln barrels. OPEC raised the forecast of world demand for its oil by 220 thousand barrels per day.

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