ECB no longer fights deflation - 10.3.2017

US stocks close little higher ahead of payrolls

US stocksclosed little changed on Thursday after some days of losses as markets were awaiting the positive official payrolls data for February on Friday. The post-election rally on Trump’s bets seems to have started losing its steam on higher expectations of the Fed rate hike next week. Now traders price in about 90% chances for the Fed rate hike in March. US dollar fell as euro advanced after the ECB President Mario Draghi said that ultra-loose monetary policy was no longer needed. US dollar index, a measure of a greenback’s value against a basket of six major currencies, closed 0.01% lower at 101.970. Dow Jones industrial average advanced 0.01% to 20,858.19, the S&P 500 rose 0.08% to 2,364.87 while the Nasdaq composite ended up 0.02% to 5,838.81. S&P 500 energy index climbed 0.6% after two days of losses regardless of the 2%-fall in oil prices. Oil retreated on the news that US oil stockpiles reached their record high. The today’s nonfarm payrolls report is expected to show extra 190’000 jobs in the US in February.

ECB calls off decision to fight deflation

European stocks closed marginally higher on Thursday as banking stocks took the lead after the ECB decision. European Central Bank left its monetary policy unchanged yesterday but stated there was no need to counter deflation any longer. The ECB improved the eurozone inflation and growth outlook for 2018. EURUSD rose above $1.06 during the Draghi’s speech and ended the day 0.36% higher at $1.0577. FTSEurofirst 300 index added 0.1% to 1,470.65. The pan-European STOXX 600 index added 0.1% while banking sector closed up 1.1%. Royal Dutch Shell and BP together with miners BHP Billiton and Glencore dragged on London stocks.

Nikkei reached its 14-month high

Japanese stocks were on the rise as yen slumped. Nikkei closed at its record high since December 2015 on Friday as exporters benefited from US dollar which hit a 6-week high against the Japanese yen and on expectations of the Fed rate hike next week. Financials also advanced as US bond yields increased. Nikkei climbed 1.2% to 19,604.61. The broader Topix added 1.2% to 1,574.01. Chinese stocks were flat on the news about the economic and investment policies from the country’s annual parliamentary meeting as liquidity conditions are likely to get tighter next week. The CSI300 index added 0.1% to 3,430.20 while Shanghai Composite was flat at 3,215.88. In Hong Kong, Hang Seng index stood at 23,496.80. Energy shares tumbled for the second day on falling oil prices.

Oil prices advance

WTI rose 0.5% while Brent crude futures added 0.4%.

Gold under pressure from US dollar

Gold fell below the key level of $1,200 an ounce on Friday on stronger US dollar and expectation of the rate hike next week in US. Spot gold fell to $1,194.55 an ounce on Friday while US gold futures for April slid $5.40 an ounce to $1,197.80.