The stock bias has been mostly determined by the influx of liquidity | IFCM UAE
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The stock bias has been mostly determined by the influx of liquidity - 24.6.2014

The world stock markets had a decline in prices on Monday. This happened in spite of positive economic data from the United States. Sales in the secondary market increased by 4.9% for May to 4.89 million units. This is the maximum growth since August 2011. The Manufacturing PMI from Markit rose to a peak in May 2010 and amounted to 57.5 points. We believe that the recent price performance is largely determined by the liquidity influx. Yesterday, the trading volume on the U.S. stock exchanges was 10% below the monthly average and totaled 5.07 billion shares.



Among the companies included in the Dow Jones, we would note the falling prices of General Electric and Boeing. The head of General Electric, Jeffrey Imelt may retire early. Boeing has declared the dividends for the first quarter in the amount of 73 cents per share. The record will be held on August 8th. The net income, compared to the fourth quarter, decreased by almost 22%, and payments to the shareholders will be the same. This is the positive event, but it takes time. We do not exclude that the prices have dropped because of unsuccessful tests of the ground-based missile system developed by Boeing commissioned by the Ministry of Defense of the United States. The company may lose a military contract worth $3.5 billion in the U.S. Today, we expect the new buildings sales for May and the consumer confidence index for June. In our opinion, the preliminary forecasts are positive.

European stocks fell yesterday, due the weak PMI manufacturing and business activity for June in Germany, France and the EZ as a whole. Today, we will see the indexes of business and economic confidence (IFO) in Germany coming out at 8-00 CET. The forecast is neutral. The futures on American stock indexes and European stocks are traded slightly positive now.

The Nikkei rose before the speech of the Prime Minister, Shinzo Abe. He is going to declare the parameters of reforming the tax and pension systems to support the national economy.



The Oil price fell. Since it became known that the Sunnis Muslims assault in Iraq does not influence its exports. The Oil shipment from southern Iraq in the first 21 days of June was 2.53 million barrels per day, which is close to the highest level since 2003. Iraqi exports amounted to 2.8 million barrels per day in February before the military events. However, the further Oil price reduction is prevented by: another suspension of oil production in Libya and the forecast of the Oil reserve decline in U.S. by 1.3 million barrels during the last week, for the fourth time in a row. The U.S. official data on the Oil reserves will be released tomorrow.

The natural gas prices have fallen on expectations that the good weather in the United States can contribute to further increase its reserves. They grow for six consecutive weeks and exceed 100 million cubic feet. Recall that the official data on the U.S. natural gas reserves will be released on Thursday. In the meantime, the trading volumes are low - 17% below the 3-month average. Gas is used for heating and electricity generation for air conditioners. Too much heat may increase the demand, so market participants monitor the reserve levels.

The Copper prices slightly corrected after the rapid growth. Its imports to China in May fell by 17% to 283 thousand tons. The country consumes 40% of world copper production.



The price of grain futures fell. The USDA announced that 74% of corn, 71% of the spring wheat and 72% of soybeans are in the "good and excellent" conditions. This is above the forecasts of market participants. The average over five years for maize is 68% in June under "good and excellent" conditions. The USDA also reported of 33% of the harvest of winter wheat. This is more than market expectations (28%) and the average of five years (31%).

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