By IFCMarkets

US stocks closed mostly higher after volatile trading session following the second day of yuan devaluation by the Peaple’s Bank of China. The dollar weakened as investors bet the Federal Reserve will delay the expected interest rate hike, with the ICE US Dollar Index, a measure of the dollar’s strength against a basket of six major currencies, falling 1%. As CME Group’s FedWatch tool indicated, Fed funds futures traders were pricing in a 39% probability of a September rate hike, down from 45% a day earlier. The S&P 500gained 1.98 points or 0.1%, after losing up to 32 points and falling into negative territory for the year. Apple shares recorded a 1.5% gain, paring a more than 3% loss on the day. Shares of Warren Buffett’s Berkshire Hathaway Inc. fell 0.7% after Standard & Poor’s Ratings Services placed the company’s ratings on review to assess the financing implications for the company’s standing following news the company agreed to buy Precision Castparts for about $32 billion. Today at 13:30 CET July advance retail sales will be published in US. The tentative outlook is positive. At the same time initial jobless claims and unemployment claims will be released. The tentative outlook is positive. And at 15:00 CET July business inventories will be released. The tentative outlook is neutral.

European stocks recorded the worst day on Wednesday after Chinese yuan fell for the second day. The euro rose 1.4% as speculators bought back the euros they had used to fund carry trades in emerging-markets currencies. Exporter stocks were hit hard as investors interpreted yuan’s continued slide as a policy decision by the PBOC to embark on a currency war to boost its exports by devaluing yuan. The Stoxx Europe index tumbled 2.7%. German’y DAX 30 slumped 3.3% to close below 11,000 for the first time in a month, France’s CAC 40 lost 3.4%. Sectors with heavy exposure to China like auto makers and makers of luxury goods were the biggest decliners. BMW lost 3.7%, Peugeot was down 4.9%, and Fiat Chrysler Automobiles slumped 6.5%. In economic data industrial output in the 19 member euro-zone fell by more than expected in June. Today at 12:30 CET European Central Bank monetary policy meeting minutes will be released. Tomorrow at 7:00 CET second quarter preliminary GDP will be released in Germany. The tentative outlook is positive.

Nikkei rose 1% today as yen weakened after China’s central bank calmed markets saying there was no basis for further yuan depreciation. Japan’s core machinery orders fell 7.9% following weaker than expected export and factory output data released earlier, spurring concerns Japan may record a second quarter contraction when GDP data are published on August 17.

China’s yuan is weakening today at a slower pace after the central bank signaled it believes the exchange rate is now at its proper level and denied suggestions it plans to devalue the currency 10% in order to support exports.

Oil prices are extending gains today after Wednesday’s report by International Energy Agency raised global oil demand growth by 200 thousand barrels-a-day to 1.6 million barrels-a-day due to lower oil prices.

Gold futures are falling today after ending sharply higher on Wednesday as equity markets retreated and dollar weakened, making the safe haven metal less expensive for buyers in other currencies.

Grain prices fell sharply on Wednesday as US official crop forecast beat market expectations.

Market Analysis provided by IFCMarkets