Central bank tightening concerns weigh on markets
US stocks fall on reports ECB considers scaling back stimulus program
US stocks extended losses on Tuesday as investor confidence was undermined by reports the European Central Bank could start scaling back its bond purchases ahead of schedule. The dollar strengthened on haven demand. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, ended 0.4% higher at 96.102. The Dow Jones industrial average fell 0.5% to 18168.45 led by shares of 3M and DuPont. The S&P 500 lost 0.5% settling at 2150.49 led by utilities and telecom stocks. The Nasdaq index closed 0.2% lower at 5289.66. Reports that the ECB may start reducing monthly 80 billion euros ($89.7 billion) purchases before the program’s scheduled March 2017 end added to concerns about the impending rate hike by Federal Reserve as investors await the start of the earnings season. Richmond Fed President Jeffrey Lacker, a known hawk, said the Federal Reserve should adopt a strategy of raising interest rates before inflation moves higher like it did in 1994. Lacker isn’t a voting member of the Fed’s policy-setting panel this year. Currently Fed fund futures traders are pricing in a 63% likelihood of the Fed raising rates in December, according to the CME Group's FedWatch tool. Today at 13:00 CET Mortgage Applications will be released by the Mortgage Bankers’ Associations in US. At 14:15 CET September Nonfarm Employment Change will be published by ADP, the outlook is positive for dollar. At 14:30 CET October Trade Balance will be released, the outlook is negative. At 15:45 September final Services PMI will come out, the outlook is neutral. At 16:00 CET September ISM Service PMI will be published, the outlook is positive. At the same time August Factory Orders are expected to come out lower than previous month.
ECB says rates will stay low until inflation rises
European stocks posted gains for the sixth straight session led by Deutsche Bank shares and UK stocks. The euro continued the slide against the dollar despite reports the ECB may start winding down purchases of bonds before the scheduled end of the quantitative easing program in March 2017. The ECB later indicated that the central bank's decision-making body has not discussed reducing the pace of its monthly bond buying with ECB chief economist Peter Praet saying rates will remain low until inflation gets up to the ECB's target. The British Pound fell 0.9% against the dollar as investors weighted implications of Brexit settlement after Prime Minister Theresa May signaled her government will focus in Brexit negotiations on immigration and UK sovereignty, with banks based in Britain getting no special treatment. The Stoxx Europe 600 index rose 0.8% higher. Markets rose despite weak data indicating the ECB’s efforts to boost inflation through monetary stimulus yield no results yet: euro-zone producer prices fell 0.2% in August from July, and were down 2.1% from August 2015.The DAX 30 added 1% to 10619.61 helped by 1.5% gain in Deutsche shares and 3.3% jump in BMW stocks after the German carmaker was upgraded to outperform by Exane BNP Paribas. France’s CAC 40 index rose 1.1%. UK’s FTSE 100 gained 1.3% settling at 7074.34 with weaker Pound helping boost prices of stocks of many multinational constituent companies which generate the bulk of their revenue overseas. Today at 11:00 CET August Retail Sales will be published in euro-zone, the tentative outlook is negative for euro.
Japanese stocks rise on weaker yen
Asian stocks are mixed today with investors struggling for direction after reports about hawkish central bank policy considerations. Nikkei rose 0.5% with exporter stocks getting a boost from weaker yen and bank stocks gaining on expectations of higher interest rates. China’s markets are closed for the National Day holiday. Hong Kong’s Hang Seng index is up 0.3% lifted by energy shares on higher oil prices overnight. Australia’s All Ordinaries Index lost 0.6% with Australian dollar inching higher against the greenback after decline following central bank’s decision to leave interest rates at 1.5%.
US crude inventory draw supports oil
Oil futures prices are inching higher today in a mixed trading after a report late Tuesday by the industry group American Petroleum Institute US crude inventories fell 7.6 million barrels last week, for a fifth straight week. Prices declined the previous day as traders continued to assess the impact of a preliminary OPEC agreement to cut output. December Brent crude slipped less than 0.1% to $50.87 a barrel on London’s ICE Futures exchange on Tuesday. Today at 16:30 CET US Crude Oil Inventories will be released by the Energy Information Administration.
Precious metals recover after sharp drop
Gold is recovering today following the biggest loss in more than three months the previous day as dollar hit a two month high. A stronger dollar makes dollar-denominated gold more expensive for buyers who use other currencies. Spot gold is up 0.3% at $1272.12 after falling over 3.3% on Tuesday. Platinum has rebounded 0.8% to $992.4 an ounce, spot silver is 0.7% higher at $17.939 an ounce.
US stocks fall on reports ECB considers scaling back stimulus program
US stocks extended losses on Tuesday as investor confidence was undermined by reports the European Central Bank could start scaling back its bond purchases ahead of schedule. The dollar strengthened on haven demand. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, ended 0.4% higher at 96.102. The Dow Jones industrial average fell 0.5% to 18168.45 led by shares of 3M and DuPont. The S&P 500 lost 0.5% settling at 2150.49 led by utilities and telecom stocks. The Nasdaq index closed 0.2% lower at 5289.66. Reports that the ECB may start reducing monthly 80 billion euros ($89.7 billion) purchases before the program’s scheduled March 2017 end added to concerns about the impending rate hike by Federal Reserve as investors await the start of the earnings season. Richmond Fed President Jeffrey Lacker, a known hawk, said the Federal Reserve should adopt a strategy of raising interest rates before inflation moves higher like it did in 1994. Lacker isn’t a voting member of the Fed’s policy-setting panel this year. Currently Fed fund futures traders are pricing in a 63% likelihood of the Fed raising rates in December, according to the CME Group's FedWatch tool. Today at 13:00 CET Mortgage Applications will be released by the Mortgage Bankers’ Associations in US. At 14:15 CET September Nonfarm Employment Change will be published by ADP, the outlook is positive for dollar. At 14:30 CET October Trade Balance will be released, the outlook is negative. At 15:45 September final Services PMI will come out, the outlook is neutral. At 16:00 CET September ISM Service PMI will be published, the outlook is positive. At the same time August Factory Orders are expected to come out lower than previous month.
ECB says rates will stay low until inflation rises
European stocks posted gains for the sixth straight session led by Deutsche Bank shares and UK stocks. The euro continued the slide against the dollar despite reports the ECB may start winding down purchases of bonds before the scheduled end of the quantitative easing program in March 2017. The ECB later indicated that the central bank's decision-making body has not discussed reducing the pace of its monthly bond buying with ECB chief economist Peter Praet saying rates will remain low until inflation gets up to the ECB's target. The British Pound fell 0.9% against the dollar as investors weighted implications of Brexit settlement after Prime Minister Theresa May signaled her government will focus in Brexit negotiations on immigration and UK sovereignty, with banks based in Britain getting no special treatment. The Stoxx Europe 600 index rose 0.8% higher. Markets rose despite weak data indicating the ECB’s efforts to boost inflation through monetary stimulus yield no results yet: euro-zone producer prices fell 0.2% in August from July, and were down 2.1% from August 2015.The DAX 30 added 1% to 10619.61 helped by 1.5% gain in Deutsche shares and 3.3% jump in BMW stocks after the German carmaker was upgraded to outperform by Exane BNP Paribas. France’s CAC 40 index rose 1.1%. UK’s FTSE 100 gained 1.3% settling at 7074.34 with weaker Pound helping boost prices of stocks of many multinational constituent companies which generate the bulk of their revenue overseas. Today at 11:00 CET August Retail Sales will be published in euro-zone, the tentative outlook is negative for euro.
Japanese stocks rise on weaker yen
Asian stocks are mixed today with investors struggling for direction after reports about hawkish central bank policy considerations. Nikkei rose 0.5% with exporter stocks getting a boost from weaker yen and bank stocks gaining on expectations of higher interest rates. China’s markets are closed for the National Day holiday. Hong Kong’s Hang Seng index is up 0.3% lifted by energy shares on higher oil prices overnight. Australia’s All Ordinaries Index lost 0.6% with Australian dollar inching higher against the greenback after decline following central bank’s decision to leave interest rates at 1.5%.
US crude inventory draw supports oil
Oil futures prices are inching higher today in a mixed trading after a report late Tuesday by the industry group American Petroleum Institute US crude inventories fell 7.6 million barrels last week, for a fifth straight week. Prices declined the previous day as traders continued to assess the impact of a preliminary OPEC agreement to cut output. December Brent crude slipped less than 0.1% to $50.87 a barrel on London’s ICE Futures exchange on Tuesday. Today at 16:30 CET US Crude Oil Inventories will be released by the Energy Information Administration.
Precious metals recover after sharp drop
Gold is recovering today following the biggest loss in more than three months the previous day as dollar hit a two month high. A stronger dollar makes dollar-denominated gold more expensive for buyers who use other currencies. Spot gold is up 0.3% at $1272.12 after falling over 3.3% on Tuesday. Platinum has rebounded 0.8% to $992.4 an ounce, spot silver is 0.7% higher at $17.939 an ounce.
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