Most of the global stock indices continued to increase on Monday | IFCM UAE
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Most of the global stock indices continued to increase on Monday - 20.5.2014

Most of the global stock indices continued to increase on Monday. The growth began last week. As we noted yesterday, there were no significant indicators of the U.S. and the EU economies. The ECB Governing Council member, Yves Mersch said that the European Central Bank should take measures to avoid deflation at the meeting on June 5th.

Investors speculated that the ECB may cut interest rates from the current level of 0.25%. This helped the European stock indices to grow. The shares of small biotech and Internet companies that have been the leaders of the fall before in the United States were in a good demand. Market participants expect that these companies will benefit from the first revival of the American economy. Yesterday the trading volume of the shares on the U.S. stock exchanges amounted to 4.9 billion units, and it was the lowest level for this year. Today we will watch the statements by the regional directors of the U.S. Fed, Charles Plosser and William Dudley expected at 16-30 and 17-00 CET.

European stock indices have not changed today. The British FTSE100 fell slightly. As the British company (Vodafone), being the second mobile operator in the world (after China Mobile) has introduced the weak quarterly reports and forecasted the operating income decrease in 2015 due to rising investment costs and competition in Europe. Its shares fell by 3.5%.

The Japanese Nikkei Index grew slightly on anticipation of the 2-days BOJ meeting and a little weaker Yen. Note that tomorrow night at 3-00 CET we expect the press conference of the BOJ head, Haruhiko Kuroda. Prior to this, there are the Foreign Trade data for April expected to come out. In our opinion, the forecasts are positive for the Japanese stock index.

According to the World Gold Council, the demand for the Gold (XAUUSD) in China fell by 18% to 263.2 tons in the first quarter compared to the same period of the last year. This was due to reduction in purchases of coins and ingots. Buying jewelry increased by 18 tons to 203.2 tons. The demand decrease for the Gold in India was 25%, down to 190.3 tons. Note also the reduced purchases of the Yellow Metal in Turkey by 42% to 27.2 tons, by 13% to 33.1 tons in the United States in Thailand by 56% to 24.5 tons.

The Sugar price decreased as the negotiations between the USDA and Mexican Government regarding the restoration of its export volume to the United States got started. Earlier, the U.S. officials raised duties to protect their producers.



As we predicted in the previous review, the Wheat prices and the prices for other crops, including the Soyb, showed a good growth. According to the USDA, there were 49% of the area under wheat sown in the beginning of the week in the U.S. Market participants expect the higher figures, at 52%. There was only a quarter of the agricultural area sown in North Dakota. This is far below the average for five years (55%). The Corn shows 73%, slightly below the average for five years at 76% and market expectations at 74%. The soybeans have reached 33% of the planned level against the five-year average at 38% and the forecasts of 35%. Note that the planting delay in the U.S. is due to the lack of rain. An additional positive for soybeans was the increase in its exports from the U.S. for the week (up to 15 May) by 64% compared to the same week a year ago.



The Cotton prices have fallen to 3-months low. Due to the wet weather in West Texas, the good harvest is expected. The U.S. is the world's largest cotton importer. Earlier, the Cotton quotes were falling due to reduction in Chinese imports.



The Coffee is trading with high volatility. We do not exclude that the prices are affected by active signing of contracts in Brazil. According to Safras e Mercado, Brazilian farmers have already sold 90% of the old coffee crop and about 18% of the new crop. Recall that Brazil has the most significant drought of 50 years, which caused a decline in the coffee crop forecasts to 47-48 million bags of 60 kg.

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