2010-07-16 10:50

XTB market snapshot

Disappointing results from Google, quarterly reports of the Bank of America, Citigroup and General Electric and macroeconomic figures from the US will be main factors influencing the sentiment on financial markets on Friday.

Google below expectations

The market got used to a series of better-than-expected quarterly reports from Google. Hence investors felt disappointed with the yesterday’s release. Although the second-quarter revenues were higher than forecasted, the earnings didn’t come up to the expectations, reaching 6,45 dol. per share excluding special items, against 6,52 dol. a share awaited. The shares of the company fell about 4% in after-hours trading.

Bullish news for today

Besides the disappointing results from Google, the news from other companies was rather positive. The quarterly results released by Advanced Micro Devices were perceived with enthusiasm, while Goldman Sachs informed about the settlement with Securities and Exchange Commission. The information about the stop of oil leakage into the Gulf of Mexico could also affect the sentiment today. Positive results from Bank of America and Citigroup should also be awaited after the yesterday’s release from JP Morgan Chase. The market analysts expect that BoA earned in the second quarter 22 cents a share on 29,6 bln dol. revenues, whereas the Citigroup is about to reach 5 cents a share on 22,4 bln dol. revenues.

Strong weakening of the dollar

A strong depreciation of the dollar against the European currencies was the event of Thursday. A successful 15-year Spanish bond auction and weak macroeconomic figures from the States (particularly significant fall of NY Empire State and Philadelphia FED indices) were the catalysts. The EUR/USD climbed above 1,29, testing the 2-month up and regaining 10 out of 32 cents loss made between November 2009 and June 2010. The GBP/USD pair reached the highest level since August, while USD/CHF sank to the lowest point since January. The upcoming days may bring a correction but the upward trend should continue in the following weeks. The increasing risk appetite puts pressure on the weakening of the dollar against the European currencies.

Friday schedule

The macroeconomic figures releases are the main events for Friday. The capital inflows May report (74 bln USD forecasted), June CPI (1,2% YoY expected) and University of Michigan Sentiment Index (prognosis: 75) are scheduled for today. The recent weeks show that one should be awaiting the last two figures to be below the forecasts, ergo worse for the US economy. There is even a threat of the  deflation return, if CPI falls deeply.

Jacek Mielcarek
jacek.mielcarek@xtb.pl
XTB Poland

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