By IFCMarkets
US stocks tumbled on Thursday concerned with possible US rake hike in June after the surprisingly hawkish Fed April meeting minutes came out this week. The timing of US Fed rate hikes remains the major concern among investors who have already got used to benefiting from historically low interest rates. Moreover, the rates hinder economic growth, inflation and limit stock market liquidity. At this moment the markets are pricing in a 32% chance of the June rate hike up from 15% on Tuesday. US dollar index, a measure of a greenback’s value against a basket of six major currencies, is now at 95.31 having hit the level of 95.502 overnight. This week the US currency rose already 2.4% (see dollar index live). S&P 500 index fell to a fresh low since March closing 0.37% lower at 2,040.04. Six out of ten its major sectors closed in the red with industrials leading the fall (-0.95%). Microsoft shares dipped 0.96% while Verizon slipped 1.51% which also weighed on the index. Dow Jones industrial average lost 0.52% to 17,434.99 while Nasdaq composite fell 0.56% to 4,712.53. Wal-Mart stocks surged 9.58% and Cisco Systems added 3.5% as their Q1 profit beat analysts’ expectations. Monsanto stocks rose 3.52% on the news the German Bayer made a takeover proposal. The trading volume on the US exchanges was around 7.2bn shares on Thursday which is slightly below the past 20 trading days’ average of 7.3bn a day. Today at 16:00 CEST the existing home sales for April are expected in the US, the tentative outlook is positive. At 19:00 CEST the Baker Hughes oil rigs count will be released, the current oil rigs number is 318.
European stocks opened 1.2% higher today while sterling is among the top performers this week on fading Brexit expectations. European indices were bolstered by the Asian trade and rising oil prices. UniCredit stocks advanced 3.9% on the rumours the bank may dispose of some assets to improve its capital base. Mining sector added 1.9% as copper rose on strong data on the China’s housing market. Anglo Ameriac and Glencore stocks gained 3.7% and 2.7% respectively. Coca Cola shares added 4.4% as its rating was upgraded to “buy”. Today early in the morning the producer price index for April came out negative in Germany. The eurozone current account data were also released today being above the previous reading. No more significant data are expected today in Eurozone.
Asian stocks were mixed on Friday as Japanese Nikkei index recovered from early losses to end the day 0.5% up at 16,736.35 and the week 2% up while Chinese Shanghai Composite Index retreated for the 4th week on concerns over the China’s economic soundness. Other Chinese stocks were on the rise with blue-chip CSI300 index advancing 0.5% to 3,078.22. The Japan’s Nikkei index advanced as US dollar held its recent gains against yen. The broad-market Topix index added 0.5% to 1,340.40. The trading volume was low ahead of the two-day G7 meeting which started today in Japan. The USDJPY rate remains above the psychological level of 110 yen as dollar strengthened on surprisingly hawkish April Fed meeting minutes. As yen weakened, Japanese automakers outperformed the stock market index with Toyota Motor Corp up 1.2%, Mazda Motor Corp up 1.6% and Nissan Motor Corp up 0.9%.
Oil futures prices are on the rise on continued fears around supply disruptions in Canada and Nigeria although the prospects of the US rate hike pushed the US dollar higher and made some investors fix profits. WTI oil futures rose 1% to $48.64 a barrel closing this week 5.3% higher while Brent oil futures rose to $49.20 a barrel heading again to test $50 level and closing this week 2.8% higher.
Gold is set to close this week 1.5% lower which is its record weekly decline in 8 weeks. The precious metal is retreating as US dollar is gaining ground on better prospects of the June US interest rate hike. Spot gold is hovering around $1,256 on Friday.
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Copper, a key industrial metal, is also poised to end the third straight week with losses.
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