By IFCMarkets

US stocks retreated on Wednesday led by energy stocks as oil fell and positive data supported the case for a Federal Reserve rate hike this year. The dollar weakened slightly: 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, slipped 0.04% to 95.971. The Dow Jones industrial average fell 0.3% to 18400.88 with shares of Chevron and Boeing, each down more than 1%, weighing on the blue chip index. The Dow finished with a monthly loss of 0.2%, snapping six-month winning streak. The S&P 500 closed 0.2% lower at 2170.95 led by energy and materials stocks. The broad market index ended with a monthly decline of 0.1% after five-month rally. The Nasdaq composite index lost 0.2% to 5213.22 but managed to finish August with a 1% gain. Investors are cautious ahead of the nonfarm payrolls report due Friday. After Federal Reserve Chair Janet Yellen said at Jackson Hole symposium improving US economy strengthened the case for a rate increase investors anticipate the central bank will likely raise rates in September if payrolls rise by more than 200000. The monthly report by the independent agency Automatic Data Processing Inc. estimated private-sector employment rose 177000 in August, compared with expected 175000 growth. In other economic data, pending home sales at 1.3% over month in July reached the second-highest reading in a decade while Chicago purchasing managers index for August fell to 51.5 from 55.8 the previous month. Today at 13:30 CET Initial Jobless Claims and Continuing Claims will be released in US. The tentative outlook is negative. At 15:45 CET final Services PMI for August will be released by Markit, the outlook is neutral. At 16:00 CET August ISM Manufacturing PMI and Construction Spending for July will be published, the tentative outlook is neutral. At 16:30 CET Natural Gas Storage Change will be released by the Energy Information Administration.

European stocks fell on Wednesday with energy shares following oil lower while banking stocks rose on news German Deutsche Bank and Commerzbank held merger talks. The euro weakened as euro-zone inflation in August at an annual rate of 0.2% came in below the 0.3% expected rate, far from the European Central Bank’s target of near but just below 2%. The Stoxx Europe 600 fell 0.4%. Oil producer Tullow Oil fell 3.7% and oilfield equipment and services provider Subsea 7 ended 0.9% lower. Germany’s DAX 30 index closed 0.6% lower at 10592.69, up 2.5% for the month. German blue chip index fell despite German retail sales growth reached a multiyear high in July with a rise of 1.7% and jobless claims fell further in August and the jobless rate stayed at a record low. France’s CAC 40 fell 0.4% while UK’s FTSE 100 lost 0.6%. Today at 10:30 CET August Manufacturing PMI will be released in UK by Markit. The tentative outlook is positive for Pound. And from 09:50-10:00 CET final August Manufacturing PMIs for France, Germany and euro-zone will be released, the tentative outlook is neutral.

Chinese stocks are lower today after private Caixin Manufacturing Purchasing Managers’ Index (PMI) slipped to 50.0 in August, indicating manufacturing activity stagnated in August as growth in output and new orders slowed. The 50.0 level is the no-change mark which separates expansion of activity from contraction. Shanghai Composite Index is down 0.7% while Hong Kong’s Hang Seng Index is up 0.8%. Australian stocks extended declines with the S&P ASX 200 down 0.3% as Australian dollar strengthened. Nikkei ended 0.2% higher today with weaker yen lifting exporter stocks. Toyota shares ended 0.7% higher, Nissan added 1.6%.

Oil futures prices are edging lower today after a sharp drop following the US Energy Information Administration report Wednesday crude oil stocks rose by 2.3 million barrels, much higher than the 1.3 million barrels expected. October Brent crude fell 2.8% to $47.04 a barrel on London’s ICE Futures exchange on Wednesday.

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