By IFCMarkets

US stock market advanced on Wednesday for second session as risk appetite improved with receding Brexit worries and oil rose. The dollar weakened with pound and euro gaining for second day: the live dollar index data indicate the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, closed down 0.4% at 95.626. The Dow Jones Industrial Average gained 1.6% settling at 17780.83, led by Nike and American Express, up 3.8% and 3.5% respectively. The S&P 500 closed 1.7% higher at 2070.77. Financial stocks were best performers ending 2.3% higher followed by energy stocks, up 2%. All ten sectors recorded gains. The Nasdaq Composite Index jumped 1.9% to close at 4779.25. As investors watch the unfolding of market developments after Brexit their focus has turned back to monetary policy and corporate earnings. Federal Reserve said all 33 banks that participated in the Fed’s stress tests this year easily passed minimum capital requirements having more than doubled their capital since 2009 by adding more than $700 billion in common equity capital. The turmoil after Brexit has lowered expectations Federal Reserve will continue tightening monetary policy this year with Fed funds futures pricing in a higher probability of a rate cut this year than a hike, according to the CME Group’s FedWatch tool. In economic news consumer spending increased for a second month in May but at a slower pace than in April. The growth of core consumer prices was flat at an annualized rate of 1.6% in May according to the personal consumption expenditure price index, the Fed’s preferred gauge of inflation. And pending home sales fell 3.7% in May after several months of strong gains. Today at 14:30 CET initial jobless claims and continuing claims will be released in US. At 15:45 CET June Chicago Purchasing Manager’s Index will be published, the tentative outlook is positive.

European stock markets rose for the second straight session on Wednesday. The euro gained against the dollar. The Stoxx Europe 600 rose 3.1%. EU leaders urged UK on Wednesday to make the declaration about the withdrawal from the trade union as quickly as possible by invoking the Article 50 of the EU treaty. But Britain’s Prime Minister David Cameron, who has announced his resignation, said his successor will be the one to launch the exit negotiations. Credit Suisse analysts forecast the UK will not trigger Article 50 for a long time, while JP Morgan said on Wednesday its base case now is that Scotland will vote for independence and institute a new currency before the UK exits from the EU in 2019. Scottish voters overwhelmingly voted to remain in the EU and Scotland’s First Minister Nicola Sturgeon has said she wants to abide by that result. Most bank shares advanced after two day losses but Italian banks slumped on reports German Chancellor Angela Merkel isn’t supportive of Italy’s plan to provide 40 billion euros to its banks in order to stabilize its financial system. Germany’s DAX 30 index rose 1.8% to 9612.2. France’s CAC 40 index jumped 2.6% and UK’s FTSE 100index rallied 3.6% erasing its losses after Brexit vote. Today at 09:55 CET June employment change and unemployment rate will be released in Germany, the tentative outlook is neutral for euro. At 10:30 CET final reading of Q1 GDP will come out in UK, the outlook is neutral. At 11:00 CET June advance consumer price index will be published in euro-zone, the tentative outlook is positive.

Asian stocks are rising today with Hong Kong’s Hang Seng Index up 1.4% while Shanghai Composite Index is down 0.19%, and Australia’s S&P ASX 200 is 1.7%. Nikkei rose 0.06% today pairing earlier gains as yen rebounded. Nikkei ended the month 9.6% lower, the biggest drop since May 2012.

Oil futures prices are declining today as crude oil supply is expected to increase with the ceasefire in Nigeria and receding wildfires in Canada. Oil closed higher on Wednesday on higher than expected drawdown of US crude stockpiles, sixth straight weekly decline. The 4.1 million barrels drop in crude inventories last week was bigger than the 3.9 million barrel drop reported by the American Petroleum Institute trade group late Tuesday. August Brent crude rose 4.2% to $50.61 a barrel on London’s ICE Futures exchange yesterday.
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