US stocks edged lower on Tuesday as investors responded to fluctuations in US Treasury bond yields. Higher yields mean higher borrowing costs for US companies, effectively resulting in monetary tightening and making it harder for companies to expand. Stocks recovered from steeper losses as the benchmark 10-year Treasury yields pulled back after reaching six-month highs. The S&P 500 fell 0.3 percent with eight of its 10 main sectors finishing lower. The dollar traded lower as Treasury yields declined, with the ICE dollar index falling 0.6% to 94.40. AOL shares jumped 18.62 percent after Verizon said it would buy the company in a $4.4 billion deal. Apple declined 0.36 percent. In economic data, March job openings declined to 4.99 million from February’s 5.14 million. Today at 12:00 CET Mortgage Applications will be released in US. At 13:30 CET April Advance Retail Sales and Import Price Index will be published. The tentative outlook is negative for the dollar. At 15:00 CET March Business Inventories will be released. The tentative outlook is positive.
European stocks tumbled following a sell-off in global bond markets. The sell-off in bond markets continues for the second week as investors expect that bonds are going to decline after a strong rally in the beginning of 2015. Bonds started to rise in anticipation of the quantitative easing program of the European Central Bank. As deflation fears subsided in euro-zone after the start of the ECB’s QE program investors expect inflation to start picking up, driving bond yields higher and prices lower. The yield on Germany’s 10-year bond jumped to 0.67 % from about 0.62% on Monday. The euro rebounded on Tuesday, climbing 0.9% to $1.1242 against the dollar, helped by rising yields and relief that Greece made the 750 million euro ($840 million) payment to the International Monetary Fund a day early. The Stoxx Europe 600 index fell 1.3%, while Greece’s ATG index closed up 1.8%. Today at 10:00 CET March Industrial Production and advance estimate of 1Q GDP will be released in euro-zone. The tentative outlook is positive for euro. And at 12:30 CET ECB Monetary Policy Meeting Minutes will be released. Today at 9:30 CET April Jobless Claims Change , March Unemployment Rate and Average Weekly Earnings will be released in UK. The tentative outlook is positive. And at 10:30 CET Bank of England Inflation Report will be released and Governor Carney will give a press conference.
Nikkei hit today 2-week high after foreign investors bought Nikkei futures and investors expected more equity buying by the Bank of Japan. Tomorrow at 0:50 CET financial data on foreign and domestic purchases of bonds and stocks in the previous week will be released in Japan. And at 7:00 CET preliminary Machine Tool Orders for April will come in.
Oil prices rose on Tuesday as US Energy Information Agency predicted a 86,000 barrels- a-day decline in shale oil output in June and investors expected a decline in US crude supplies. Today at 15:30 CET Crude Oil Inventories will be released in US. OPEC raised its world oil demand growth estimate to 1.18 million barrels-a-day to reach 92.5 million barrels-a-day this year against 91.32 million barrels-a-day in 2014.
Gold prices closed at highest level in a week as the US dollar weakened and a plunge in equity markets boosted safe haven demand.