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World markets retreat on Fed rate hike concern - 11.3.2015

World stock markets plunged on Tuesday. US stocks suffered steep declines on Tuesday as investor worries that the Federal Reserve may hike interest rates as early as June prompted a selloff. The Dow Jones Industrial Average and S&P 500 gave up their 2015 gains and ended in negative territory for the year, with Dow dropping 1.9%, the biggest decline in five months. The dollar rose against the euro, Pound, Canadian dollar, Swedish krona and the Swiss franc on expectations of imminent rate hike. It traded lower against yen, which is considered a safe haven asset. The ICE US Dollar Index, a measure of the dollar’s strength against a basket of six currencies, rose 1.1% to 98.62. The US economic indicators released on Tuesday underperformed, with wholesale inventories rising 0.3 % in January as sales were down 3.1%, their biggest decline since 2009. Today at 12:00 CET Mortgage Applications for the week ended March 6 will be released by Mortgage Bankers Association in US.

Dow Jones Industrial Average stock index

European stocks fell further on Tuesday as concerns about inevitable rate hike in US and uncertainty over Greece’s financial future overweighed investors’ optimism over the European Central Bank’s launch of bond purchases. The Stoxx Europe 600 index slumped 0.9%. Energy shares suffered the biggest loss. Euro slipped to its lowest level since April 2003. Today at 10:30 CET January Manufacturing Production and Industrial Production will be released in UK. The tentative outlook is positive for the Pound. At 16:30 CET National Institute of Economic Research and Statistics will publish the UK February GDP estimate. The tentative outlook is positive.

Nikkei is rising today after a 0.7% drop yesterday. Investor sentiment was bolstered by better-than-expected machinery orders. Core machinery orders fell 1.7 percent in January, but the decrease was smaller than the forecast 4 percent drop, providing some hope for a rise in capital expenditures. Producer prices were unchanged in February from January, when they fell 1.3 percent. Tomorrow early in the morning the Manufacturing Index of Business Survey will be released by the Ministry of Finance, and January Tertiary Industry Activity will be published by the Ministry of Economy, Trade and Industry in Japan.

Economic data released in China indicated the world’s second largest economy is slowing down. Growth in China's investment, retail sales and factory output all missed forecasts in January and February and fell to multi-year lows.

Oil prices fell on Tuesday as rallying dollar weighed on dollar denominated commodities. Brent fell more than the West Texas Intermediate crude oil as investors took profits after recent highs in Brent’s premium, with the spread narrowing to $8.1 from a 13-month high of $13 at the end of February. Today at 15:30 CET Crude Oil Inventories will be released in US, market participants expect data will show another record high in US crude inventories last week. The American Petroleum Institute reported yesterday that data from its oil producing members showed an inventory drop of over 400,000 barrels instead for last week. Saudi King Salman said on Tuesday his kingdom will continue with oil and gas exploration despite the price drop.

Gold fell on Tuesday as falling equity prices failed to raise the demand for the safe haven asset enough to offset the pressure from rising dollar.

Copper for delivery in May declined 1.8 percent yesterday, the most in six weeks.

Copper price

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