Quarterly earnings report is the main driver of the stock market - 16.7.2018

On Friday, US stock prices rose slightly

A slight increase allowed the S&P 500 index to update a 5-month high.

Investors believe that the US wins in the trade war with China. Stock prices of the American industrial companies Boeing, Caterpillar and 3M increased. Nevertheless, the growth of stock indices on Friday was moderate due to neutral earnings reports by the largest US banks. Citigroup stocks fell by 2.2%, and JPMorgan Chase - by 0.6%. According to the results of the second quarter, investors expect a 20% increase in the aggregate profit of the companies from the S&P 500 list. This is a very high indicator. The earnings report should be very good, so that prices continue to rise. The S&P 500 is only 2.5% below its historical high and may correct down, if the data disappoint market participants. In general, everyone is waiting for earnings reports and on Friday, the volume of trades in the US turned out to be the lowest in the current year. Data on retail sales for June will come out today at 14:30 CET in the US.

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European stock indices rose following the US stock indices.

The euro closed with a slight increase and regained its entire decline at the beginning of trades.

The decrease in the consumer confidence indicator by the University of Michigan in the United States contributed to the strengthening of the European currency. The Eurozone trade balance for May will be published today at 11:00 CET. The outlook is positive. Good corporate news contributed to the price increase of European companies on Friday. In particular, British recruitment company Hays published a forecast of its financial results and its stocks increased by 8.6%.

Nikkei continued its growth for the third consecutive day.

This was contributed by the continued weakening of the yen, which was firmly fixed above the level of 112 yen per dollar. Nikkei added 3.7% over the week, which became the maximum growth for 4 months. This was mainly contributed by the good news from Fast Retailing and SoftBank Group.

Copper prices stopped their decline and are close to the annual low.

China consumes the half of the world's copper production. Today, its GDP for the second quarter was published. It grew by 6.7% in annual terms, which is slightly less than the increase of 6.8% in the first quarter. According to U.S. Commodity Futures Trading Commission (CFTC), the number of contracts on the sale of copper reached the high since December 2016. Their closure may provoke a correction of copper prices upward.