US stocks slide as oil prices drop - 20.4.2017

Dow and SP 500 fall while Nasdaq advances

US stocks closed lower on Wednesday as energy shares declined with a drop in oil prices. The dollar inched higher after Treasury Secretary Mnuchin’s comment President Donald Trump is “absolutely not” trying to talk down the greenback: 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 up 0.3% at 99.801. The S&P 500 lost 0.2% settling at 2338.17 led by energy stocks, down 1.4% with seven of the eleven primary sectors finishing in the red. The Dow Jones industrial average fell 0.6% to 20404.49 weighed by nearly 5% drop in IBM shares after the company reported a double-digit slump in profit. But the Nasdaq index rose 0.2% closing at 5863.03.

While majority of companies so far have reported better than expected results the Federal Reserve’s Beige Book, a collection of anecdotes from business leaders operating across the Fed’s 12 districts, showed wages are climbing while inflation is not rising. This indication of no expansion in consumer demand as wages rise may give a pause to central bank policy makers in tightening the monetary policy. They had indicated they would like to raise interest rates two more times this year if economic data justify such a move, and stagnant inflation with rising wages negatively affecting manufacturing sector is not the positive signal supportive of further tightening. Today at 14:30 CET initial jobless claims and unemployment claims will be released, the tentative outlook is negative. And at 16:00 March Leading Indicator will be published, the outlook is negative. At 16:30 CET natural gas storage change will be released by Energy Information Administration.

HK 50

Bank shares pull European stocks higher

European stocks inched higher on Wednesday with the rebound in bank stocks outweighing losses in energy shares. Both the euro and British Pound pulled back against the dollar after previous day’s advance sparked by UK Prime Minister Theresa May’s call for an early general election. The Stoxx Europe 600 added 0.2%. Germany’s DAX 30 rose 0.1% to 12016.45. France’s CAC 40 closed 0.2% higher and UK’s FTSE 100 index fell 0.5% to 7114.36.

UK parliament approved Prime Minister May’s call to hold a snap election on June 8. May said an election is needed to strengthen the UK’s position in its coming Brexit negotiations with EU officials, and hopes Conservative Party will increase its current 17-seat majority in parliament. Opinion polls on Wednesday showed French establishment candidate Emmanuel Macron is ahead of conservative Francois Fillon, far-left candidate Jean_Luc Melenchon and far-right Mari Le Pen with first round of presidential election scheduled this Sunday. A Macron/Fillon second-round runoff is considered market friendly as Euroskeptics Melenchon and Marine Le Pen have said they will hold a referendum on France’s EU membership if they win. Euro-zone economic news were mixed: the final reading of euro-zone’s inflation rate at 1.5% in March was down from 2% in February, but the trade balance returned to a 17.8 billion euro surplus in February. Today at 11:00 CET euro-zone construction output for February will be released. At 12:30 CET and 13:30 CET Bank of England Carney will speak at the Institute of International Finance Policy Summit and the Bank of France event in Washington, DC. And at 16:00 CET advance Consumer Confidence for April will be released in euro-zone.

Asian stocks down

Asian stock indices are mostly down today as investor are cautious ahead of Sunday’s first round of France’s presidential election. Nikkei ended 0.01% lower at 18430.49 despite continued weakening of the yen against the dollar and data showing exports rose a stronger-than-expected 12% in March from a year earlier. Chinese stocks are down: Shanghai Composite Index is 0.8% lower and Hong Kong’s Hang Seng Index is 0.4% lower. Australia’s All Ordinaries Index is 0.1% higher as the Australian dollar rebounded against the buck.

Oil prices recover on OPEC deal extension talk

Oil futures prices are inching higher today after comments by OPEC-members Saudi Arabia and Kuwait that the agreement by the Organization of the Petroleum Exporting Countries and major producers, including Russia, to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year would be extended beyond June. Prices fell on Wednesday after US Energy Information Administration reported surging gasoline inventories as well as another rise in US crude oil production to 9.25 million bpd, up almost 10% percent since mid-2016. June Brent crude fell 3.6% to $52.93 a barrel on Wednesday on London’s ICE Futures exchange on Wednesday.