Lingering geopolitical tensions still drag on markets - 13.4.2017

US stocks fall as dollar slides

US stocks retreated on Wednesday as investor confidence was undermined by lingering geopolitical tensions. The dollar continued weakening with President Trump’s remark the dollar is getting too strong putting additional pressure on greenback: 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 down 0.6% at 100.127. The S&P 500 lost 0.4% settling at 2344.93 led by industrial and materials stocks, with seven of the eleven primary sectors finishing in the red. The Dow Jones industrial average fell 0.3% to 20591.86 weighed by losses in Caterpillar and Boeing shares. The Nasdaq index dropped 0.5% closing at 5836.16.

Haven assets such as bonds and gold were still in demand on heightened geopolitical concerns after President Trump ordered cruise missile strike on a Syrian air base last week following alleged chemical attack. The White House has accused Russia of trying to cover up the suspected chemical weapon attack in Syria, and Russian foreign affairs minister Sergei Lavrov said at a news conference after the meeting with his US counterpart Moscow wasn’t convinced of chemical attack in Syria, but both countries agreed that a United Nations probe is necessary. The yield on 10-year Treasurys fell 3 basis points to 2.27% and gold futures rose to highest levels since early November. President Trump also said he would prefer interest rates to stay low and wouldn’t label China a currency manipulator because it hasn’t been manipulating its currency for months and such a move could jeopardize his talks with Beijing about containing North Korea. In economic news, US import prices fell 0.2% in March which was mostly due to lower fuel prices. Citigroup, JP Morgan and Wells Fargo will report first quarter earnings today. At 14:30 CET today initial jobless claims and unemployment claims will be released, the tentative outlook is positive. At 16:00 CET University of Michigan consumer confidence index preliminary index for April will be published, the outlook is negative. And at 16:30 CET natural gas storage change will be released by Energy Information Administration.

HK 50

Auto maker shares lead European stocks higher

European stocks inched higher on Wednesday led by car maker shares. Both the euro and British Pound added to their gains against the dollar helped by President Trump’s remark dollar is too strong. The Stoxx Europe 600 added 0.2%. Germany’s DAX 30 rose 0.1% to 12154.70. France’s CAC 40 closed marginally lower and UK’s FTSE 100 index fell 0.2% to 7348.99.

Auto maker shares advanced on positive sales results. BMW shares rose 0.9% as the company reported first-quarter sales were up 5.3% year-over-year. Volkswagen gained 0.1% on report the brand sales rose 2.5% on year world-wide. Shares of Renault advanced 0.5%.Today at 09:00 CET ECB president Draghi speaks in Frankfurt. No important economic data are expected today in euro-zone.

Asian stocks down

Asian stock indices are mostly lower today as US officials said the administration was focusing on tougher economic sanctions against North Korea after President Trump diverted the USS Carl Vinson aircraft carrier group towards the Korean peninsula. Nikkei ended down 0.7% at 18426.84, four month low as dollar inched lower against the yen, pressuring exporter stocks. Chinese stocks are higher marginally on stronger trade data: China's exports rose at the fastest pace in a little more than two years in March, climbing 16.4% percent from a year earlier, and import growth remained strong at 20.3%. Shanghai Composite Index is 0.1% higher while Hong Kong’s Hang Seng Index is down 0.3%. Australia’s All Ordinaries Index is 0.7% lower as the Australian dollar surged against the greenback.

Oil prices rise following surprise US stock draw

Oil futures prices are inching higher today after snapping four session winning streak on Wednesday. Prices closed lower yesterday despite an unexpected 2.2 million barrels drop in US crude oil inventories as imports declined by 717 thousand barrels a day. Traders were discouraged by the Energy Information Administration report that US domestic output is still climbing. June Brent crude fell 0.7% to $55.86 a barrel on Wednesday on London’s ICE Futures exchange.