US stocks opened lower on Wednesday and ended a volatile trading session essentially flat as investors adopted a cautious stance in anticipation of Greek debt negotiations outcome. The broad stock market index S&P 500 closed flat at 2,068.53, while the Nasdaq Composite rose 0.4% due to a 2.3% gain in Apple Inc shares. PepsiCo shares rose 2.5% as the company reported higher than expected earnings and announced share repurchases and dividend increases. The volume of trading on US exchanges at 6.4 billion shares was below the 7 billion average for the last five sessions. The ICE US Dollar Index, a measure of the US currency’s strength against a basket of six major currencies gained 0.2% and closed at 94.9530. Today a batch of economic data will be released in US. At 14:30 CET December Advance Retail Sales, January Retail Sales Excluding Autos, Initial Jobless Claims for the week ended February 7 and Continuing Claims for the week ended January 31 will be published. The tentative outlook is positive for the dollar, with jobless claims forecast to increase by just 9 thousand over the previous week. At 16:00 CET Business Inventories for December will be released, the tentative outlook is neutral with no change expected over previous month’s levels.
European markets retreated on Wednesday as market participants awaited a meeting between the euro-zone finance ministers and Greek delegation. The Stoxx Europe 600 index fell 0.2%. Market participants’ optimism was boosted by a CNBC report late Wednesday that Greek and European Union officials have reached an agreement “in principle” on a plan to rework the country’s bailout. Euro traded higher on Wednesday on hopes of a quick resolution of the Greek debt standoff. Later Reuters reported that Euro- zone finance ministers were unable to agree with Greece on the future of the financial aid, and no joint statement on the next procedural steps was issued after seven hours of talk. The parties are scheduled to meet next Monday, meanwhile the summit of European Union leaders today will provide another opportunity for more negotiation. The single currency will likely trade sideways until an indication that the Greece government fails to come to terms with its creditors and Greek exit from euro-zone becomes inevitable.
Nikkei is rising sharply today as weaker yen boosted exporters, with Toyota rising 1.8 percent and Sony gaining 3.8 percent. The dollar advanced against yen and traded at ¥120.41, its highest level since the closing compared with ¥119.35 late Tuesday.
Oil fell on Wednesday after the US Energy Information Administration said crude inventories rose to “highest level for this time of year in at least the last 80 years”, amounting to total of 417.9 million barrels and marking a bigger than expected increase in weekly inventories. US crude inventories are rising on the backdrop of declining rig counts. The report of the International Energy Agency indicates that the United States will remain the world's top source of oil supply growth up to 2020, even after the recent collapse in prices. It estimates that the build-up of oil inventories around the world due to slowing demand and oversupply will stop by mid-2015 and the markets will start to tighten afterwards.
Gold fell on Wednesday as the demand for the safe haven asset decreased on the back of a stronger dollar.