By IFCMarkets
US stocks recovered on Tuesday as investor confidence was buoyed by data and President Trump’s measured statement after North Korea fired a missile over Japanese airspace. The dollar rebounded: 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, rose 0.2% to 92.188. The S&P 500 rose 0.1% settling at 2446.30 led by technology stocks, with ten out of 11 main sectors closing higher. Dow Jones industrial average gained 0.3% closing at 21865.37 helped by gains in United Technologies and Boeing shares. The Nasdaq composite index rose 0.3% to 6301.89
Stocks are trading at historically high valuations as the SP 500 has advanced more than 9% in 2017. Stocks recovered from early losses amid seasonally low volumes which make the market more sensitive to sentiment swings resulting in higher volatility. Trump said ‘all options are on the table’ after Korean missile test. Positive economic data contributed to sentiment recovery: S&P/Case-Shiller 20-city index rose 5.7% over year in June, at the same rate as in May. At the same time consumer confidence strengthened in August, and remains just below a 16-year high.
European stocks closed lower on Tuesday as geopolitical tensions flared after North Korea launched a missile over Japan and euro rose above $1.20. Both the euro and British Pound ended marginally lower against the dollar. The Stoxx Europe 600 fell 1%. Germany’sDAX 30 dropped 1.5% closing at 11945.88. France’s CAC 40 fell 0.9% and UK’s FTSE 100 lost 0.9% to 7337.43. Markets opened 0.5%-0.7% higher today.
The euro rally after European Central Bank chief Draghi didn’t talk down the shared currency in his Jackson Hole speech hurts the outlook of European exporters. Stronger euro makes the products of European exporters less competitive in overseas markets. Markets shrugged off positive economic data: consumer confidence in Germany is estimated to improve further in September, according to GfK. French GDP rose 0.5% in Q2 over previous period, according to the second reading, in line with expectations.
Asian stock indices are mostly higher today as concerns subsided after North Korea fired a missile over Japan. Nikkei rose 0.7% to 19506.54 helped by a weaker yen against the dollar. Chinese stocks are mixed: the Shanghai Composite Index is 0.2% lower while Hong Kong’s Hang Seng Index is up 1%. Australia’s All Ordinaries Index is flat despite the continued strength of Australian dollar against the greenback.
Oil futures prices are extending gains today ahead of the official US inventory report. Prices closed higher yesterday on expectations of higher US demand for European oil as Hurricane Harvey caused the shutdown of almost quarter of US refineries and 15% of total US crude output. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories. Analysts polled by S&P Global Platts expect a decline of 1.5 million barrels in crude inventories. Prices ended higher yesterday after the American Petroleum Institute reported that US crude supplies dropped 5.78 million barrels last week. October Brent crude rose 0.2% to $52 a barrel on London’s ICE Futures exchange on Tuesday.
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