European problems do not really bother the U.S. stock market participants - 7.11

The decline in world stock indices was restored on Thursday. The major Portuguese bank, Banco Espirito Santo delayed payments on its securities due to financial problems. Its shares have fallen by 19%. Investors fear a new banking crisis.

Yesterday's intraday drop in the S&P 500 by 1% was the highest of three months. However, the trading session results showed it declined less significantly – by 0.41%. Still, European problems do not really bother the U.S. stock market participants. In addition support was provided from the labor market positive data in the United States this week. The number of new unemployed people fell to 304 thousand. The trading volume on the U.S. exchanges was only 1% higher than the monthly average. Today, we will not see any major macroeconomic data, but the major U.S. bank, Wells Fargo will report for the second-quarter before the trading session begins. This can greatly affect the sentiment of market participants on the taking problems with the banking sector in Europe into account. It is expected that Wells Fargo will be all right - U.S. futures and European stocks are trading in the prominent black now.

The heads of Banco Espirito Santo and Espirito Santo Financial Group made a number of positive statements and partly reassured investors. This Morning, we saw the neutral inflation data coming out in Germany and and that is it concerning the EU for today.

Japanese Nikkei keeps moving within a narrow neutral range. On Monday morning, at 4-30 CET, we will see the data on industrial production for May in the second reading. No changes, compared to the first reading, are expected.

The USDA will publish its report at 18-00 CET, which will contain the forecast for reserves and production of the following products: wheat, corn, soybeans, cotton, beef and pork.. The table shows the current forecasts of market participants, the June forecast from USDA (WASDE) and harvest of last year for corn and soybeans. Production is expressed in billion bushels, yield - in bushels per acre.

As it can be seen from the table, market participants expect further rise in crop forecasts from the USDA for the current year. Accordingly, despite the increase in the intra-day chart due to the bad weather in Europe, most grain futures closed with losses yesterday. An additional negative factor was the latest auction in China on selling corn government reserves in the domestic market. On Wednesday and Thursday, it was 2.2 million tons sold of the proposed 4.5 million tons. Elimination of state reserves is accompanied by a reduction in Chinese imports of grain, which leads to their surplus in the world market.

The Natgas prices rose slightly. The Societe Generale bank has published a review where it is stated that for the export of liquefied natural gas from the U.S. to Europe, the domestic Gas price should not fall below $ 4-4.5 per million British thermal units (mmBtu) in America in 2014-2016. In Europe, the Gas price should not be below $ 9/mmBtu whereas now it is only $ 6.25/mmBtu.

The Oil are corrected upwards after a significant fall. The International Energy Agency predicts an increase in global demand for the next year by 1.4 million barrels per day (bpd). The demand growth reached 1.2 million bpd in 2014, compared with 2013 year. While the OPEC production could be reduced by 100 thousand bpd to 29.8 million bpd next year. Note that according to the head of the Total Christopher de Margery to the world's oil production preservation requires exploration costs around $ 1 trillion. until 2017. In our opinion, it can support the price of "black gold". Every year the world consumes about 33 billion barrels of oil, and new opened fields of 10-20 billion barrels.