Stock Markets inch higher supported by oil rebound

August 4, 2016

This article is originally referred from IFC Markets Market Overview

US stock market advanced on Wednesday with energy shares leading the gains as oil prices rebounded. The dollar strengthened: according to the live dollar index data the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, edged 0.48% higher to 95.523.

The Dow Jones industrial average added 0.2% settling at 18355.00, snapping the seven session retreat, the longest stretch of losses in about a year. The blue-chip index was helped by gains in Goldman Sachs and JP Morgan shares, up 1.46% and 1.59% respectively.

The S&P 500 closed 0.3% higher at 2163.79 led by 1.8% gain in energy shares. The Nasdaq Composite Index advanced 0.4% ending at 5159.74. Positive economic data supported market sentiment: the Automatic Data Processing Inc. report, which is used as a predictor of official jobs report due on Friday, showed 179000 jobs were added by the private sector in July, slightly above estimates.

And while the Institute for Supply Management’s Services PMI index declined to 55.5 in July from 56.5 in previous month, new orders index rose pointing to continued strength for the services sector in near term. Today at 14:30 CET Initial Jobless Claims and Continuing Claims will be released. The tentative outlook is positive for dollar. At 16:00 CET Factory Orders will be released, the tentative outlook is negative.

European stocks closed marginally higher on Wednesday helped by gains in bank shares. The euro and the Pound weakened against the dollar ahead of the Bank of England meeting. The Stoxx Europe 600 inched 0.01% higher as bank shares rebounded with concerns over stress test results and regulatory requirements subsiding.

Shares in ING Groep and Societe Generale jumped 8.2% and 3.2% respectively as the banks reported higher than expected second quarter net profits. Germany’s DAX 30 index closed 0.3% higher at 10170.21. France’s CAC 40 index and UK’s FTSE 100 underperformed, both declining 0.2%. In economic news final July reading for a composite purchasing managers’ index for the euro-zone was revised higher to 53.2 from the flash reading of 52.9.

Today at 10:00 CET the European Central Bank publishes the economic bulletin. At 10:10 CET July retail sales will be released in Germany, France and euro-zone. The tentative outlook is negative for euro. And at 13:00 CET Bank of England interest rate decision will be announced and inflation report will be published. The central bank is expected to cut the interest rate 0.25 percentage point to 0.25% and indicate a bias for further easing. And at 13:30 CET BOE Governor Mark Carney will give a press conference.

Asian stocks are gaining today as risk appetite was buoyed by the recovery in oil prices. Hong Kong’s Hang Seng Index is up 0.61% and Shanghai Composite Index has inched 0.1% higher with improved risk appetite, Australia’s S&P ASX 200 is 0.22% higher. Nikkei ended 1.1% higher today as the yen weakened. Banks and exporters outperformed: Toyota shares rose 1.83% , Panasonic jumped 2.69%.

Oil futures prices are edging lower today after rebounding the previous day following the official report US gasoline inventories fell 3.3 million barrels though crude oil stockpiles rose 1.4 million barrels. October Brent crude rose 3.1% to $43.10 a barrel on London’s ICE Futures exchange on Wednesday.

Original Source: IFC Markets Market Overview

Hercules