By IFCMarkets
US stocks closed slightly higher on Monday as health care stocks rallied while the Dow industrials retreated following lower oil prices. The dollar continued strengthening as investors weighed hawkish comments of New York Fed President William Dudley. Dudley, who is a voting member of the Fed’s policy committee and is seen as a close ally of Fed Chair Janet Yellen, said on Friday that the Fed raising interest rates twice this year remained a “reasonable expectation.” The live dollar index data indicate the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, rose 0.3% to 94.133. The Dow Jones Industrial Average slipped 0.2% to close at 17705.91 led by 3.5% decline in Caterpillar. Chevron and United Technologies were also among worst performers. The S&P 500 gained 0.1% and settled at 2058.69 led by a 1.1% gain in health care stocks offsetting declines in energy, materials and industrial stocks. Investor risk appetite was subdued after reports Chinese government won’t use excessive investment or rapid credit expansion to boost growth. Investors are also concerned about falling corporate earnings: the reported earnings growth rate for S&P 500 companies for first quarter is negative 5.1% and the revenue growth rate is negative 1.9%. Today at 12:00 CET March Small Business Optimism Index will be released by National Federation of Independent Business in US. And at 16:00 CET Job Openings and Labor Turnover Summary results will be published. At the same time March Wholesale Inventories and Sales will come out. The tentative outlook is positive.
European stocks ended higher on Monday. The euro weakened after dovish comments by the European Central Bank Vice President Vítor Constâncio who said the ECB still has policy tools it can use to bring inflation back to its near 2% target. The Stoxx Europe 600 closed up 0.5%. Higher oil prices boosted investor confidence early in the session but the decline afterward weighed on energy and mining stocks. Tullow Oil shares sank 5.4%, Repsol SA dropped 3%. Weaker-than-expected Chinese trade statistics also hurt market sentiment: China’s exports fell 1.8% year-over-year in April, while imports slumped 10.9%. Shares of Anglo American tumbled 14%, Glencore plc dropped 9% and Rio Tinto lost 7.9%. Germany’s DAX 30 rose 1.1% closing at 9980.49 helped by positive statistics: factory orders in Germany rose more than the expected 0.7% growth after an 0.8% decline in February. CAC 40 added 0.5%, UK’s FTSE 100 index fell 0.2%. Data today indicated German industrial output fell 1.3% in March instead of an 0.2% decline while posting 1.8% growth on the quarter. German exports unexpectedly rose 1.9% in March while imports declined 2.3%. Today at 10:30 CET December Trade Balance will be published in UK. The tentative outlook is positive.
Asian stocks are rising today as mixed Chinese inflation data eased concerns about deflationary risks to the world’s second largest economy. Chinese data showed consumer price index rose 2.3% in April from a year earlier as commodity prices rebounded, while producer price index rose for the second month in a row. Nikkei closed 2.2% higher today helped by weaker yen which hit two weak low of ¥108.88 against the dollar after Finance Minister Taro Aso reiterated that Tokyo is ready to intervene to weaken the currency if one sided moves persist.
Oil futures prices are rising today after falling on Monday on indications the wildfires in Canada may not have as much a negative impact on country’s crude output as initially feared. July Brent crude fell 3.8% to $43.63 a barrel on London’s ICE Futures exchange on Monday. The replacement of Saudi Arabian oil minister Ali al-Naimi over the weekend by Khalid al-Falih, the former head of the state-owned Aramco, was another negative factor. Khalid al-Falih is expected to follow the strategy of protecting Saudi Arabia’s oil market share which has further reduced the likelihood of an oil output freeze deal with other large non-OPEC producers.
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