By IFCMarkets
US stocks ended lower on Wednesday reversing some of previous day gains as President Trump’s comment he is ready to shut down the government if Congress provides no funding for a border wall with Mexico weighed on market sentiment. The dollar erased most of its previous day 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, closed down 0.3% at 93.18. The S&P 500 fell 0.4% settling at 2444.04 led by consumer-discretionary and industrial stocks. Eight out of 11 main sectors ended lower. The Dow Jones industrial average lost 0.4% to 22812.09. Nasdaq composite slipped 0.3% to 6278.41.
Besides the controversial comment he was ready to shut down government over $1.6 billion for Mexican border wall funding, President Trump said the North American Free Trade Agreement might be terminated with talks still underway. The recent higher volatility can also partly be explained by lower than usual trading volumes: total volume for US stocks was 5 billion shares Wednesday, the lowest year to date, with average daily volume in August at 5.98 billion shares. House Speaker Paul Ryan later played down the likelihood of a government shutdown. Economic data were mixed: the manufacturing purchasing managers index fell to a two-month low 52.5 in August, while the Services PMI rose to 56.9, the highest level in 28 months. Separately, a reading of new homes sales fell 9.4% on month in July.
European stock indices retreated on Wednesday as a sharp downgrade of sales forecast by WPP advertising giant dented investor confidence ahead of a central bank symposium in Jackson Hole. The euro rose against the dollar on positive euro-zone data and British Pound inched lower. The Stoxx Europe 600 index lost 0.5%. Germany’s DAX 30 fell 0.45% to 12174.30. France’s CAC 40 slipped 0.32% and UK’s FTSE 100 was little changed at 7382.65.Indices opened 0.2%-0.4% higher today.
WPP shares sank 10.9% as media advertising giant cut its full-year sales outlook after a drop in demand caused it to miss first-half targets. In economic news, the increase in euro-zone Manufacturing PMI offset a slowdown in the services index, supporting the euro despite dovish comments by ECB president Draghi.
Asian stock indices are mixed today after controversial comments overnight by President Trump threatening a government shutdown and possible end of the North American Free Trade Agreement. The yen rose against the dollar which weighed on Japanese stocks. TheNikkei ended 0.4% lower at 19353.77 despite weaker yen against the dollar. Falling steelmaker stock prices dragged the index lower on media reports Japan’s biggest steel producer had agreed on a price cut with Toyota. Chinese stocks are mixed: Shanghai Composite Indexis 0.5% lower despite a 23% jump in profits for state owned firms in the first seven months of 2017 from a year earlier. Hong Kong’s Hang Seng Index is up 0.4%. Australia’s All Ordinaries Index is 0.2% higher lifted by gains in mining stocks with the Australian dollar continuing the slide against the US dollar.
Oil futures prices are steady today after US inventories official report indicated crude inventories dropped by 3.3 million barrels last week to 463.17 million barrels. October Brent crude rose 1.4% to $52.57 a barrel on Wednesday on London’s ICE Futures exchange. Gains were limited yesterday by Energy Information Administration report total domestic crude-oil output rose 26 thousand barrels a day last week to 9.528 million barrels a day.
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