US stocks ended higher on Monday as positive economic data suggested manufacturing sector expanded in May after US economy slowed down in the first quarter. S&P 500 rose 0.2%, with eight of its 10 main sectors finishing higher. The Institute for Supply Management manufacturing index outperformed expectations as it rose in May to 52.8% from 51.5% in April, indicating accelerating pace of manufacturing growth. At the same time personal spending was flat in April while personal incomes rose, suggesting rising savings rates. Construction spending in April also beat forecasts, rising 2.2%. The dollar advanced as the data reinforced expectations that the Federal Reserve will raise interest rates this year. Fed Chair Janet Yellen had said that the central bank would normalize interest rates if US economic data continued to improve. The ICE US dollar index, a measure of the dollar’s strength against a basket of six currencies, rose 0.5% to 97.43. The trading volume was 5.9 billion shares on US exchanges, some 3.2% below the five-day average. Today at 14:45 CET Institute for Supply Management New York Index for May will be released in US. At 15:00 CET April Factory Orders will be released. The tentative outlook is negative.
European stocks edged higher on Monday as investors assessed the progress of negotiations between Greece and its international creditors. The Stoxx Europe 600 index ended 0.2% higher as it pared gains in the afternoon trade after unconfirmed reports about a deal between Greece and its lenders was refuted. Gains in pharmaceutical shares led the index higher as Roche rose 1.3% after positive results in its cancer treatment drug tests. Concerns about possible Greek default weigh on euro as Athens is set to make a 300 million euro payment to the International Monetary Fund on Friday. Euro gained some ground after reports that German Chancellor Angela Merkel, IMF head Christine Lagarde and European Central Bank President Mario Draghi will meet to discuss a Greek rescue plan. Today at 08:55 CET labor market data for May will be released in Germany. The tentative outlook is positive for euro. At 10:00 CET May consumer price index for euro-zone will be released by Eurostat. The tentative outlook is positive.
Nikkei ended 0.1 percent lower today as investors took profits, breaking the 12 session winning streak that pushed the index 5.1 percent higher. Dollar hit twelve-and-half year high against yen, and Bank of Japan Governor Haruhiko Kuroda said it was important for currency rates to reflect economic fundamentals and the central bank’s policy aim is to foster price stability, but didn’t mention any measures to support the yen.
The Reserve Bank of Australia left the interest rate unchanged today but didn’t provide any easing bias as was widely expected. Australian dollar moved higher against the dollar.
Oil prices fell on Monday as estimates indicated the output from the Organization of the Petroleum Exporting Countries in May was at two-and-a-half year high at 31.2 million barrels-a-day. At the same time China’s official purchasing managers index showed only small gains in May, indicating limited scope for pick-up in energy-demand for one of the world’s largest oil consumers.
Gold prices ended higher on Monday after Boston Fed President Eric Rosengren said the Fed cannot hike rates based only a forecast of better times, but gains were limited by stronger dollar.