Upbeat US data buoy market sentiment - 4.10.2017

US stock indexes close at fresh highs

US stock indices ended at new record highs on Tuesday as positive economic data buoyed risk appetite. The dollar was little changed: 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, inched up 0.01% to 93.619. The S&P 500 added 0.2% settling at record high 2534.58. Dow Jones industrial average rose 0.4% closing at fresh all-time high 22641.47, posting fifth straight daily gain. The Nasdaq composite index gained 0.2% to new record high 6531.71.

Treasury yields inched lower after gains last week following President Trump’s tax cut proposal and Federal Reserve chair Yellen’s comment the Fed shouldn’t move “too gradually” in further rate hikes. Data showing GM and Ford auto sales jumped in September reversing recent downward trend on the back of demand to replace hurricane damaged vehicles buoyed investor confidence. Today ADP private payrolls report will be in focus as ADP data are widely used as nonfarm payrolls predictor. Strong reading will boost likelihood of a third rate hike this year though new jobs are expected to be negatively affected by recent hurricanes.

European stocks extend gains

European stocks closed higher on Tuesday in aftermath of Catalonia independence referendum. The euro inched higher against the dollar and British Pound extended losses. The Stoxx Europe 600 rose 0.2% . German market was closed for Unity Day holiday. France’s CAC 40 closed 0.3% higher and UK’s FTSE 100 rose 0.4% to 7468.11.

Euro retraced higher after Monday drop spurred by increased euro-zone political uncertainty following Catalonia independence referendum over weekend. Catalan government has indicated it is considering making a declaration of independence this week. But central government in Madrid has declared the vote illegal and the Constitutional Court is expected to rule against an independence declaration. In economic news UK construction activity slowed unexpected in September, weighing on Pound. On the positive note 0.3% increase in euro-zone producer prices in August was higher than expected.

Asian markets mixed

Asian stock indices are mixed today in thin trading with China and South Korea markets closed for week-long holidays. Nikkei inched up less than 0.1% to 20626.66 as yen rebounded against the dollar. Hong Kong’s Hang Seng Index is up 0.7%. Australia’s All Ordinaries Index is down 0.8% as Australian dollar climbed against the greenback.

AU 200

Oil slips ahead of US inventory report

Oil futures prices are lower today ahead of official US crude oil inventory report. The American Petroleum Institute industry group reported late Tuesday US crude stocks fell by 4.1 million barrels last week while gasoline stockpiles rose 4.2 million barrels. Prices fell yesterday: December Brent crude fell 0.2% to $56 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.