US stocks slipped further on Wednesday as markets price in the expectations of a rate hike by the Federal Reserve in June after Friday’s solid job report. The Dow Jones Industrial Average and S&P 500 lost 0.2% each. The two stock benchmarks are both down about 1% for the year as of Wednesday’s close. Expectations of inevitable rate hike by the Fed continued to push the dollar higher against major currencies. The ICE US dollar index, which measures the dollar’s strength against a basket of six rival currencies, rose 1% to 99.68, nearing 100 level for the first time since 2003. Mortgage applications, released yesterday, fell 1.3% following the previous week’s modest 0.1% increase. Today at 13:30 CET February Advance Retail Sales, Initial Jobless Claims for the week ended March 7 and Continuing Claims for the week ended February 28, and Import Prices will be released in US. The tentative outlook is positive. The initial claims are expected to fall to 305 thousand from the previous week’s 320 thousand, sales and import prices are expected to rise. At 15:00 CET January Business Inventories will be published, the tentative outlook is neutral.
European stocks rebounded after two consecutive declines as the depreciating euro lifted exporter stocks. The Stoxx Europe 600 rose 1.5% hitting a multi-year high and Germany’s DAX 30 surged 2.7% to a new record high. The euro fell 1.4% against the dollar to below $1.06 for the first time in 12 years on Wednesday, accelerating the slide towards parity. The cheaper euro has made the exporter goods less expensive for overseas customers and thus driven exporter share gains. European automakers were among the best performers with shares of BMW AG, Volkswagen AG and Renault SA gaining 5% , 4.7% and 4% respectively. Today at 10:30 CET February Trade Balance will be released in UK. The tentative outlook is positive. At 11:00 CET January Industrial Production in euro zone will be released by Eurostat. The tentative outlook is positive.
Nikkei is rising today as investors are positioning themselves before Friday's settlement for Nikkei futures and options contracts expiring in March. Investors who have long positions in the Nikkei futures are chasing the market hoping the futures will settle at a higher price, as the settlement price is calculated from the opening prices of the 225 shares in the Nikkei average on the second Friday of the month.
Today South Korea's central bank cut interest rates to 1.75 % from 2% in a surprise move for the first time in five months. The move came after the central bank of Thailand unexpectedly cut its benchmark interest rate on Wednesday to boost economic growth.
April Brent crude on London’s ICE Futures exchange rose 2% to $57.54 a barrel while West Texas Intermediate fell 0.3% to $48.17 on Wednesday after Energy Information Administration report showed that crude inventories climbed by 4.5 million barrels for the week ended March 6, a ninth straight weekly climb in crude supplies. Potential supply disruptions due to geopolitical tensions in the Middle East and North Africa are the main bullish factors driving Brent’s price.
Gold prices fell on Wednesday to their lowest level since early November as the US dollar continued strengthening on expectations of rising US interest rates.
May copper fell 0.7% to $2.606 a pound.