US markets mixed - 15.10.2014

The US markets started Tuesday session with sharp gains reflecting investors’ reaction to better-than-expected earnings reports, but receded later in the afternoon. The S&P 500 (SPX) closed 3 points, or 0.2%, higher at 1,877.70. It is still below its 200-day moving average, after breaching the level on Monday for the first time in nearly two years. The Dow Jones Industrial Average (DJI) swung between gains and losses and closed down 5.9 points at 16,315.19, the lowest level since April 5.

European stocks extended losses of previous day in a volatile session after the closely watched ZEW economic sentiment indicator fell on concerns over geopolitical tensions and weakening euro zone economy to negative 3.6 in October, compared with 6.9 points in September. After the ZEW survey results were published German government announced it is revising down its economic growth projections for 2014 and 2015, to 1.2% and 1.3%, respectively. After falling 1.4% following the ZEW data publication, the Stoxx 600 paired the early session losses as better-than-expected earnings reports drove US markets higher. The Stoxx 600 closed down less than 1 point at 321.53, the sixth consecutive decline for the benchmark. The rising US markets lifted European markets, with Germany’s DAX 30 closing up 0.2% at 8,825.21, notwithstanding the release of the negative sentiment indicator and recent weak data like drop in exports and industrial output. France’s CAC 40 rose 0.2% to 4,088.25. The FTSE 100 index also advanced 0.4%.

Japanese stock market rebounded Wednesday morning from previous heavy losses, breaking a five-day losing streak. The Nikkei Average closed up 0.9%, after tumbling 2.4% on Tuesday to a fresh two-month low on fears global economic weakness will weigh on US growth. Hong Kong market mirrored Nikkei’s performance, recovering today in the morning after a mild retreat on Tuesday.

Today at 9:00 CET ECB the Governing Council meeting takes place in Frankfurt, Germany and ECB President Mario Draghi speaks at the 7th Statistics Conference organised by the European Central Bank in Frankfurt, and 20:00 CT in the evening Mario Draghi speaks on the occasion of the Grand Opening event of the European Cultural Days 2014 organised by the ECB in Frankfurt. At 10:30 CET UK labor market data will be released, including Average Weekly Earnings for August, Claimant Count Rate for September and Jobless Claims Change for September. The tentative outlook is positive. At 14:30 CET Advance Retail Sales data for September will be published in US, the tentative forecast is negative.

West Texas Intermediate futures fell 4.6% as the International Energy Agency monthly report yesterday forecast global oil demand will rise by 650,000 barrels a day this year, a reduction of 250,000 from a prior projection. Oil has entered a bear market as global demand growth has weakened and US has boosted output due to increased shale production. And as long as no major producer like OPEC, US or Russia is cutting production, the trend will last. OPEC, which supplies about 40 percent of the world’s crude, is raising output and its members are cutting prices in a fight for market share. The contract for November delivery dropped $3.90 to $81.84 yesterday, the lowest close since June 2012. November Brent crude dropped $3.85, or 4.3%, to end at $85.04 a barrel on London’s ICE Futures exchange. That was Brent’s lowest settlement since November 2010.

Corn declined from highest price in five weeks as forecasts for drier weather in the US Midwest may accelerate harvesting of a record crop after wet weather delayed progress. The US is the world’s biggest producer. As harvesting accelerates, further declines in prices are expected. The contract for December delivery lost as much as 0.7 percent to $3.545 a bushel on the Chicago Board of Trade and was at $3.5475 at 2:02 p.m. in Singapore. Prices rose to $3.575 yesterday, the highest level for a most-active contract since September 8, resulting in a two-day advance of 6.9 percent. Soybeans and wheat fell too.