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Markets pull back as rally stalls

US stock markets were closed yesterday for Independence Day holiday. Last week US stocks recorded their best weekly gains since November with both S&P500 and Dow Jones Industrial Average ending 3.2% higher as investors regained confidence following Brexit shock. The dollar weakened on Monday as British Pound and yen rose: according to the live dollar index data the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, slipped 0.13% to 95.5. US stock indices futures are pointing to lower opening for US stock markets today. At 16:00 CET May Factory Orders and July Economic Optimism Index by Investors Business Daily will be published in US. The tentative outlook is negative. At 20:00 CET Federal Reserve Bank of New York President William Dudley will speak on economy at the Greater Binghamton Chamber of Commerce.

European stocks ended lower on Monday after four days of gains as losses in banking stocks offset gains in mining shares. The euro strengthened together with Pound which advanced after UK Chancellor of the Exchequer George Osborne said he plans to cut the corporation tax in the UK to boost investments in British economy. The Stoxx Europe 600 fell 0.7% while the FTSEurofirst 300 index fell 0.6%. Shares in Monte dei Paschi di Siena closed 14% lower on news the European Central Bank requested the Italian bank reduce its bad loans by 40% over three years. Italian bank shares fell after Italian Prime Minister Matteo Renzi's spokesman said the country had no plans to provide public money to support its banks. Mining shares advanced on expectations of more stimulus by China. The European stock indexes last week pared part of steep losses after Brexit on expectations of more easing by the ECB, and investors will likely adopt cautious stance before the next ECB policy meeting on July 21. Germany’s DAX 30 index fell 0.7% to 9709.09 not helped by a 2% loss in Volkswagen as the German auto maker rejected demands that it pay compensation to European car owners who bought tempered diesel vehicles. France’s CAC 40 dropped 0.9% and UK’s FTSE 100 ended 0.8% lower. Today from 9:50-10:00 CET final June services PMIs for France, Germany and euro-zone will be published. The tentative outlook is positive. At 10:30 CET May Services PMI will be published in UK, the tentative outlook is negative for Pound. At 11:00 CET May retail sales will be released in euro-zone, the tentative outlook is positive. At the same time Bank of England Governor Carney will publish financial stability report.

Asian stocks are retreating today in thin trade after five day winning streak as investor confidence was underpinned by hopes of more central bank stimulus to support markets in post- Brexit selloff. Hong Kong’s Hang Seng Index is down 0.69% while Shanghai Composite Index is up 0.39% on report activity in China's services sector rose to an 11-month high in June with Caixin/Markit Services PMI rising to 52.7 from 51.2 in May. Australia’s All Ordinaries Index is down 1% after the Reserve Bank of Australia left the interest rate unchanged at 1.75%. Nikkei fell 0.7% today as dollar fell 0.55% to 101.94 yen. Economic data indicated activity in Japan's services sector contracted in June with Services PMI falling to 49.4 in June from 50.4 in May.

Oil futures prices are edging lower today as concerns about slowing global growth weighs on oil demand outlook and prices.

Gold is pulling back today after gaining 0.5% on Monday. The precious metal has risen about 27% year to date, advancing 8% since Brexit.



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