By IFCMarkets
US stocks track oil lower
US stocks closed lower on Wednesday led by energy shares as oil declined. The dollar weakened with investors leaning toward discounting the likelihood of monetary tightening at Fed’s September policy meeting.
Live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.24% to 95.293. The Dow Jones industrial average slid 0.2% to 18034.77 with 3.6% gain in Apple shares failing to offset big losses in IBM and Boeing shares. The S&P 500 closed less than 0.1% lower at 2125.77. The Nasdaq composite index managed to close 0.4% higher at 5173.77 helped by Apple’s advance after RBC Capital Markets rated the iPhone maker still a buy. Falling oil prices added to investors concerns about central bank’s interest rate decision at September 20-21 Fed meeting next week. Nevertheless, investors see chances of interest rate hike soon as declining despite hawkish comments by Federal Reserve official last week: fed funds futures contracts late Wednesday showed traders priced in a 15% chance of a rate increase at the Fed’s September meeting, down from more than 30% earlier this month. They estimate the chance the Fed will raise rates in December at 43%. Economic data were negative: import prices slipped 0.2% due to lower oil, while export prices dropped 0.8%. Today at 13:30 CET Initial Jobless Claims and Continuing Claims will be released in US. At the same time August Retail Sales, Producer Price Index and Current Account Balance will be published, the tentative outlook is negative. At 15:00 CET August Existing Home Sales will come out. At 15:15 CET August Industrial Production and Capacity Utilization will be released, the outlook is negative. At 16:00 CET August Business Inventories will be published, the tentative outlook is positive. And at 16:30 CET Natural Gas Storage Change will be released by the Energy Information Administration.
European stocks ended lower on Wednesday for the fifth session in a row as luxury stocks fell on disappointing earnings updates. Both euro and Pound edged higher against the dollar.
The Stoxx Europe 600 slid 0.1%. Energy companies extended losses: Tullow Oil slumped 2.5%, France’s Total lost 1.2%. German chemical company Bayer ended 0.3% higher paring earlier gains of over 4% after reaching a $66 billion deal to buy Monsanto. Germany’s DAX 30 index slipped 0.1% to 10378.40, not helped by unexpected 1.1% drop in euro-zone industrial output in July over month. France’s CAC 40 fell 0.3% while UK’s FTSE 100 gained 0.1% after UK labor report showed unemployment in the three months to July fell 39000 as unemployment rate remained stable at 4.9%. Today at 13:00 CET the Bank of England will announce its Interest Rate Decision, no change in policy is expected. Before the Bank of England rate decision August Retail Sales will be released in UK at 10:30 CET. The tentative outlook is negative for Pound. And at 11:00 CET final August inflation for euro-zone will be released, the tentative outlook is neutral. Today the Swiss National Bank left the monetary policy unchanged.
Asian stocks are mixed today with Chinese markets closed for holidays and reopening on Monday. Hong Kong’s Hang Seng index is up 1%. Hong Kong will be closed for a holiday on Friday. Nikkei fell 1.3% today to near three-week low at 16405.01. Investors are uncertain what policy tools the Bank of Japan will use to provide more stimulus for economy after reports board members may debate next week whether to cut rates more deeply and make changes to its massive asset purchases program. Australia’s ASX 200 closed 0.2% higher as Australian dollar weakened.
Oil futures prices are falling today
Oil futures prices are extending losses today on concerns increased supplies from Libya and Nigeria may add to supply overhang. US Energy Information Administration reported Wednesday crude oil stocks fell 559 thousand barrels instead of expected build of 3.8 million barrels. November Brent crude fell 2.7% to $45.85 a barrel on London’s ICE Futures exchange on Wednesday.
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