By IFCMarkets
Fed officials say support gradual rate hikes
US stocks retreated on Tuesday led by selloff in energy shares as oil prices fell. The dollar added to previous day’s gains: 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 0.2% higher at 97.736. Dow Jones industrial average lost 0.3% closing at 21467.14. The S&P 500 dropped 0.7% settling at 2437.03 led by energy and consumer discretionary stocks. Nine out of 11 main sectors finished lower. The Nasdaq index fell 0.8% to 6188.03.
Treasury yields declined on Tuesday as two Fed officials voiced their support for gradual pace of rate hikes. Chicago Federal Reserve President Charles Evans said the Fed could wait until December instead of raising rates next in September. Boston Fed President Eric Rosengren said lower rates may be a more permanent feature on the economic landscape because they reflect broad population trends. Evans is a voting member of the Federal Open Market Committee which sets Federal Reserve’s monetary policy, Rosengren isn’t a voting member of FOMC but participates in its deliberations.
European markets revers to losses as energy stocks fall
European stock indices ended lower weighed by losses in energy sector. Both the euro and British Pound extended losses against the dollar. The Stoxx Europe 600 fell 0.7%. Germany’s DAX 30 lost 0.6% closing at 12814.79. France’s CAC 40 retreated 0.3% and UK’s FTSE 100 ended 0.7% lower at 7472.71.
Asian markets lower
Asian stock indices are mostly down today as energy and materials stocks lower following a drop in oil prices. US index provider MSCI decided to add mainland Chinese stocks to its Emerging Markets Index popular benchmark on Tuesday. The decision had little immediate impact on Chinese shares as only 222 stocks are being included and they will account for only 0.73% of the Emerging Markets Index with a weighing of just 5%. MSCI set out a list of liberalization requirements before it would consider further expansion. It estimates the change, due around the middle of next year, would drive inflows of between $17 billion and $18 billion. China’s market capitalization is roughly $7 trillion. The Shanghai Composite Index is up 0.2% while Hong Kong’s Hang Seng Index is down 0.5%. Nikkei fell 0.5% to 20138.79 on a stronger yen against the dollar. Australia’s All Ordinaries Index is down 1.5% despite continued weakening of Australian dollar against the dollar.
Oil down despite expected US stock draw
Oil futures prices are falling today despite reports of strong compliance by OPEC and non-OPEC oil producers with a deal to cut global output. Reports OPEC and non-OPEC oil producers’ compliance with the output deal reached 106% in May had limited impact as traders focus on failure of OPEC’s output cuts to tighten global oil markets as US output rises. Oil prices fell on Tuesday, with the West Texas Intermediate crude contract falling 20.6% from 2017’s year-to-date high, entering a bear-market territory. August Brent crude closed 1.9% lower at $43.51 a barrel on London’s ICE Futures exchange on Tuesday. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories. The American Petroleum Institute showed late Tuesday US crude stocks fell by 2.7 million barrels last week while gasoline supplies rose 346 thousand barrels.
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