US stocks ended higher on Wednesday as market sentiment was buoyed by positive US economic data and upbeat euro-zone economic outlook by the European Central Bank. S&P 500 closed 0.2% higher at 2,114.07. US trade deficit narrowed in April to $40.9 billion from $50.6 billion in March as exports increased 1% while imports fell 3%. The pace of private sector hiring rose in May as employers added 201 thousand new jobs according to the ADP report. The data indicate that the US economy is on track to recovery from the first quarter contraction and bolstered expectations that the Fed will raise interest rates later this year. Market participants expect the Fed will not hike the rates at its meeting this month and price in a rate hike in September. Meanwhile, the growth in US services sector slowed, suggesting modest growth for the overall economy, which is consistent with the Fed’s assessment in the Beige book that the US growth will continue at a modest to moderate pace. Dollar retreated on Wednesday as euro got a boost from ECB’s upbeat assessment of the impact of quantitative easing program. The ICE US Dollar Index fell 0.5% to 95.3330. Today at 14:30 CET Initial Jobless Claims and Continuing Claims will be released in US. The tentative outlook is positive.
European stock markets ended mostly higher after ECB President Mario Draghi confirmed that the quantitative easing program will run until its full implementation in September 2016 and the central bank is not considering an early end to its easing program and is ready do more to lift the European economy if necessary. The ECB also revised upward its 2015 euro-zone inflation outlook to 0.3% from 0% expected previously. Euro rallied as the improved inflation outlook pushed the European government bond yields higher. The single currency got a boost also from the comment of Mario Draghi who said there is no need to expand the bank’s easing program and the assurance of the Greek Prime Minister Alexis Tsipras that Athens would make a payment due to the IMF on Friday. Tsipras also said a deal with creditors was "within sight". Today at 9:10 CET Markit will release May Retail PMIs for Germany, France, Italy and euro-zone. At 12:00 CET the Bank of England Rate Decision will be announced. No changes in the central bank’s monetary policy are expected.
Nikkei rose 0.1 percent today with insurers leading the gains on higher Japanese and global bond yields. Tomorrow at 6:00 CET Leading and Coincident Indexes for April will be released in Japan, the tentative outlook is positive.
Oil prices fell on Wednesday as investors expected the Organization of the Petroleum Exporting Countries would leave its output quotas unchanged at the meeting starting tomorrow and the US official report indicated the US output increased while crude oil inventories fell. According to the US Energy Information Administration report crude supplies declined 1.9 million barrels last week, but domestic oil production rose 20 thousand barrels to 9.57 million barrels-a-day.
Gold prices fell to the lowest level in more than three weeks as the demand for heaven asset diminished after US equities were lifted by positive economic reports and market sentiment was bolstered by expectations Greece is getting closer to a deal with its creditors.