Markets advance buoyed by investor optimism - 10.4.2015

US stocks edged higher on Thursday helped by a rally in energy and healthcare sectors. Investors bet that the companies will beat lowered earning expectations. The corporate profits are estimated to fall in the first quarter partially due to the impact of strong dollar on earnings of multinational companies. According to estimates first quarter earnings for S&P 500 companies are expected to fall 2.8 percent. Shares of Alcoa Inc, which was the first company to announce first quarter earnings below expectations on Wednesday after the market closed, lost 3.4%. ConocoPhillips rose 3.4 %. The jobless claims rose last week by less than expected, while the rate of layoffs remained historically low. On the negative side, wholesale sales fell and inventories edged up pointing to slowing of demand. Dollar continued its advance after the FOMC March meeting minutes showed several policy makers advocated raising interest rates in June. The ICE US Dollar Index, a measure of the dollar’s strength against a basket of six currencies, rose 1% to 98.9110. Today at 13:30 CET FOMC member Lacker speaks on economic outlook in Florida. At the same time Import Price Index will be published in US. The tentative outlook is negative for the dollar. And at 19:30 Monthly Budget Statement will be released. The tentative outlook is negative.

European stocks rallied on Thursday as market sentiment was buoyed by indications of improved performance of German economy, pick-up in merger and acquisition pace and relief that Greece met a debt-repayment deadline. The pan-European FTSEurofirst 300 index closed up 1.1 percent, hitting its highest level in eight years and taking its gains so far this year to 19 percent. Data showed exports in Germany, Europe’s largest economy, rose 1.5 percent in February after dropping 2.1 percent in January. Automaker stocks advanced as industry figures indicated in March auto sector recovered also in France, Italy, Spain and Portugal. Greece repaid roughly 460 million euro to the International Monetary Fund, and the European Central Bank raised the cap on emergency liquidity assistance that Greek banks can draw. The euro fell Thursday to its lowest level against the dollar in three weeks. No important economic data are expected today in euro-zone. At 15:00 CET the National Institute of Economic Research and Statistics will publish first quarter GDP in UK.

Nikkei fell 0.2% today as investors took profits after the benchmark hit the psychological 20,000 mark for the first time in 15 years. The reflationary policies of Japanese Prime Minister Shinzo Abe have resulted in weaker yen, boosting overseas earnings of exporters, and falling energy prices have provided additional support for Japanese economy. Market participants expect corporate profits will rise 10 to 15 percent this year.

Oil prices edged higher on Thursday on uncertainty about negotiations on Iran’s nuclear program. There is no sign of fundamental outlook improvement as output continues to increase while demand is lagging behind due to lower global economic growth.

Gold prices retreated for third straight session on Thursday as dollar rebounded after FOMC meeting minutes revealed several policy makers supported interest-rate hike in June.

Soybean prices fell to a five-month low on Thursday after the US Department of Agriculture data showed world supplies will be bigger than estimated in March. Corn and wheat prices also fell, with inventories estimated to rise 10 percent and 5.7 percent respectively from 2014.