Investors cautious awaiting more data - 8.3.2017

US stocks record consecutive loss first time in more than a month

US stock indices retreated on Tuesday led by declines in energy, telecom and health care stocks. The dollar strength endured: 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 0.1% higher at 101.795. Dow Jones industrial average slipped 0.1% to 20924.76 led by Chevron and Verizon shares. The S&P 500 lost 0.3% settling at 2368.39. The Nasdaq index fell 0.3% to 5833.93.

The stock market rally which started after President Trump election has paused as investors reevaluated chances of a rate hike at Fed’s March policy meeting after hawkish comments by several Federal Reserve officials. Currently the fed funds futures traders are pricing in about 90% chance of an interest rate increase at FOMC March meeting. Health care stocks fell after President Donald Trump tweeted he was working on a "new system" to reduce drug prices and House Republicans unveiled a plan on Monday to repeal and replace former president Obama’s health-care legislation, the Affordable Care Act. There were no surprises in economic data Tuesday: the US trade deficit in January hit highest level since early 2012, rising 9.6% to $48.5 billion, in line with expectations. Imports rose 2.3% to $240.6 billion, and exports rose 0.6% to $192.1 billion on the month. Investors are waiting for another major report - job report for February, which will figure heavily in policy makers’ assessment of US economy’s recovery outlook for rate hike decision. Today at 13:00 CET Mortgage applications will be released by the Mortgage Bankers’ Association in US. At 14:15 CET February Employment Change will be published by Automatic Data Processing, Inc., the outlook is neutral for dollar. At 16:00 CET final Wholesale Inventories for January will come out, the outlook is neutral.

Deutsche Bank shares pull European stocks lower

European stocks closed lower on Tuesday fourth session in a row on disappointing manufacturing data from Germany. Both the euro and British Pound weakened against the dollar. The Stoxx Europe 600 fell 0.3%, while Germany’s DAX 30 managed to end less than 0.1% higher at 11966.14. France’s CAC 40 underperformed losing 0.4% and UK’s FTSE 100 slipped 0.2% to 7338.99.

Investors risk appetite was undermined by disappointing data from Germany: manufacturing orders in Germany fell 7.4% in January from the month before, though the decline followed the strong result in December. Investors are cautious ahead of the European Central Bank meeting on Thursday when policy makers will decide whether a change in monetary policy is warranted given euro-zone’s improved economic performance recently. Data today showed German Industrial Production for January grew on month compared with December and held steady over year after 0.1% decline the previous month.

Asian markets follow Wall Street lead

Asian stocks are lower today though off session lows after upbeat Chinese trade data. Nikkei closed 0.47% lower at 19254.03 as yen strengthened against the dollar and data showed Japan’s economy grew less than expected. The Japanese economy grew at an annualized pace of 1.2% in October-December quarter from the previous quarter compared with the government’s preliminary estimate of 1.0%. But the pace of growth was less than the expected 1.5% rate. Chinese stocks are marginally lower after trade data showed China's imports in February grew 44.7% from a year earlier in yuan terms, accelerating from the previous month and leading to a rare trade deficit for the country. Shanghai Composite Index is 0.04% lower while Hong Kong’s Hang Seng Index is up 0.4% as inflows from mainland China crossed the $7 billion mark so far this year, according to Goldman Sachs. Australia’s All Ordinaries Index is down 0.04% with the Australian dollar edging higher against the dollar.

Nikkei

Oil prices slip ahead of inventory data

Oil futures prices are edging lower today despite the American Petroleum Institute report US stockpiles rose 11.6 million barrels last week. May Brent crude contract, closed 0.2% lower at $55.92 a barrel on London’s ICE Futures exchange on Tuesday. Prices came under pressure also by the Energy Information Administration upgrade in its forecasts for US domestic crude output to 9.21 million barrels a day this year and a record 9.73 million next year. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories.