By IFCMarkets

US stocks ended lower on Tuesday as comments by Federal Reserve members strengthened the case for interest rate hikes sooner rather than later. The dollar strengthened: 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 0.6% higher at 96.014. The Dow Jones industrial average slid 0.3% to 18454.30 led by 1.6% decline in Boeing shares while Goldman Sachs and JP Morgan led blue chip gainers. The S&P 500 ended 0.2% lower at 2176.12 with nine out of ten main sectors posting losses led by utilities stocks, down 1%. The financial sector gained 0.8% on expectations of higher interest rates. The Nasdaq index lost 0.2% to 5222.99. Federal Reserve Vice Chairman Stanley Fischer said on Tuesday that it is impossible to say whether the next interest rate increase would be “one and done”, reinforcing his Sunday comment that Yellen’s Friday speech was “consistent” with possibly two rate increases this year. Strong economic data also pointed to higher likelihood of rate hikes: Conference Board’s consumer confidence index for August came in at 101.1, much higher than the expected 97.0 level and up from 97.3 in July. At the same time housing prices at 5.13% in the 12 months ended in June came in slightly better than expected though lower than the 5.3% rise in May. Market participants are now waiting for the key report of the week – the jobs report due Friday. Chicago Federal Reserve Bank President Charles Evans today sounded less hawkish than his central bank colleagues saying he is increasingly convinced that US economic growth has slowed permanently which will keep US interest rates low for a long time ahead. Today at 13:00 CET Mortgage applications will be released by the Mortgage Bankers’ Associations in US. At 15:00 CET August Employment Change will be released by ADP. The tentative outlook is negative. AT 16:00 CET July Pending Home Sales will be published, the outlook is positive.

European stocks rose on Tuesday as weaker euro lifted exporter shares. Both the euro and British Pound weakened against the dollar. The Stoxx Europe 600 index gained 0.5%. Volkswagen shares rose 2% and French car maker Peugeot advanced 1.4% on prospect of higher earnings as weaker euro makes their products less expensive to buy for holders of other currencies. Germany’s DAX 30 gained 1.1% to 10657.64. France’s CAC 40 added 0.8% and UK’s FTSE 100 fell 0.3% to 6820.79. In economic data headline inflation in Germany remained stagnant at 0.4% in August, and the final reading of negative 8.5 of European consumer confidence in August was in line with expectations. Today at 11:00 CET preliminary August Inflation and July unemployment rate will be released in euro-zone. The tentative outlook is positive for euro.

Asian stocks are mixed today, Shanghai Composite Index is 0.3% higher supported by state-backed investors who had been buying blue-chip shares, especially financials, to stabilize the market. At the same time Hong Kong’s Hang Seng index is 0.1% down and Australia’s All Ordinaries Index slid 0.8%. Nikkei ended 1% higher today at 16887.40 as yen weakened against the dollar while data showed Japanese industrial output was flat in July.

Oil futures prices are extending losses today after the industry group American Petroleum Institute reported late Tuesday an increase of 942 thousand barrels in US crude stockpiles last week. October Brent crude fell 1.8% to $48.37 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.

Gold is edging higher today from a two-month low touched in the prior session as investors await for US nonfarm payrolls report on Friday. The safe haven metal declined 1% on Tuesday to $1308.65 as dollar strengthened on higher expectations of interest rate hike soon.

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