US stocks advance - 20.12.2016

Dow inches closer to the 20000 level

US stock indices inched higher on Monday with investors unwilling to take big bets in preholiday week after the market rallied to record highs last week. The dollar continued strengthening: 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 0.27% higher at 103.139. The Dow Jones industrial closed 0.2% higher at 19883.06 failing to break the 20000 psychologically important level. The blue-chip index was led by Microsoft and United Technologies shares. The S&P 500 added 0.2% settling at 2262.53 with telecom and real estate stocks leading the broad market higher as eight of the 11 main sectors finished in positive territory. The Nasdaq index rose 0.4% to 5457.44.

Markets ended higher after initial dip following the news a gunman killed Russia’s envoy to Turkey Ambassador Andrey Karlov in Ankara, which Russia’s foreign ministry classified as a terrorist attack. In Berlin a truck plowed into a Christmas market, killing at least nine people. Traders are uncertain whether there will be a so-called Santa Claus rally in the last trading days of 2016 because of the intensity of recent rally. In her first speech after raising interest rates at December policy meeting last week, Federal Reserve Chairwoman Janet Yellen said US labor market was strong with steady job creation, a low layoff rate and more job openings. But she also mentioned the economy is growing more slowly than in past recoveries and productivity growth “has been disappointing.” With many traders out for the holidays the trading volume at New York Stock Exchange was at 60% of the 30-year average, according to FactSet. No important economic data are expected today in US.

FTSE 100

Bank shares pull European markets down

European stocks retreated from 2016 highs on Monday as bank shares slipped. Both the euro and the British Pound weakened against the dollar. The Stoxx Europe 600 index slipped 0.1%. The DAX 30 rose 0.2% to close at 11426.70 supported by a report the Ifo business climate index for the country rose to its highest level since February 2014. France’s CAC 40 dropped 0.2% and UK’s FTSE 100 added 0.1% to 7017.16.

Bank stocks, which drove European markets higher last week, retreated as troubled Italian Banca Monte dei Paschi di Siena SpA launched a share sale to raise about €5 billion ($5.23 billion) in capital to avoid a state bailout. If it fails in raising the money, the Italian government will bail out the bank. Banca Monte dei Paschi di Siena’s shares sank 11%. Shares of Deutsche Bank dropped 4.5% after Citigroup downgraded the company to sell from hold. The German lender is set this week to settle a claim with US authorities over its handling of mortgage-backed securities, according to Reuters. Today at 10:00 CET October Current Account balance will be released in euro-zone, the tentative outlook is negative for euro. At 12:00 CET December Retailing Reported Sales will be published in UK, the outlook is negative for Pound.

Bank of Japan upgrades economy’s outlook

Asian stocks are mixed today. Nikkei ended 0.5% higher at 19494.53 today as yen edged lower against the dollar after the Bank of Japan held policy unchanged as widely expected. However the central bank improved its outlook for economy stating Japan's economy continues to recover moderately as a trend. It painted also an improved picture of consumer demand, foreign trade and output saying consumption is moving on a firm note and exports and output were picking up. Chinese stocks are falling on tighter liquidity concerns as regulators move to tighten supervision of shadow banking activities. Both the Shanghai Composite Index and Hong Kong’s Hang Seng index are 0.5% lower. Australia’s All Ordinaries Index is 0.5% higher despite a stronger Australian dollar against the dollar.

Oil prices dip

Oil futures prices are retreating today as traders are unwinding positions in the run-up to the holiday season. Prices were volatile yesterday as geopolitical tensions rose on news of the murder of Russian Ambassador Andrey Karlov. February Brent crude ended 0.5% lower at $54.92 a barrel on London’s ICE Futures exchange on Monday.