US stocks and the dollar rose on Wednesday on positive economic reports. S&P 500 closed up 0.7%, with financials leading the gains and only energy stocks falling following a sharp drop in oil prices. ADP report showed private-sector hiring in June created 237 thousand new jobs and hit the fastest pace in half a year, beating expectations by about 20 thousand. This sets the stage for positive expectations for official jobs report today. Federal Reserve policy makers had indicated the decision on timing of interest rate hike will be data dependent, and improving labor market data indicates the economy is on strong recovery track, increasing the likelihood of a September rate hike. The ISM manufacturing index also beat expectations. The dollar strengthened after the reports, the US Dollar Index, a measure of the dollar’s strength against a basket of six currencies, ended up 0.8%. Today at 13:30 CET June change in nonfarm payrolls, unemployment rate, initial jobless claims and continuing claims will be released in US. The tentative outlook is positive. At 15:00 CET May factory orders will be released. The tentative outlook is negative.
European stocks advanced on Wednesday as market sentiment was buoyed by reports Greece offered to resume talks with creditors and Greek Prime Minister Alexis Tsipras was ready to accept nearly all of the conditions of the bailout deal. The Stoxx Europe 600 rose 1.5%, Germany’s DAX 30 advanced 2.2% and France’s CAC 40 climbed 1.9%. Euro fell against the dollar. The stock market and banks in Greece are closed for the week, and ATM withdrawals by locals are limited to 60 euros a day. On Tuesday the euro-zone creditors refused to extend Greece’s bailout program which expired at midnight as Greece missed the payment to International Monetary Fund. Negotiations failed to make any progress on Wednesday and Eurogroup chairman Jeroen Dijsellbloem said there were no grounds for further talks with Greece until the Sunday referendum as Tsipras called on Greeks to reject austerity measures by voting ‘no’ to creditor proposals. European Central Bank’s Governing Council decided to leave the amount of Emergency Liquidity Assistance for Greek banks frozen at around 89 billion euros. In economic reports manufacturing sectors in euro-zone countries except for Greece expanded in June with final euro-zone manufacturing PMI meeting expectations at 52.5. Today at 10:00 CET May producer price index will be published in euro-zone. The tentative outlook is positive.
Japan's Nikkei rose 1% today supported by a weaker yen and stronger auto exporters which reported higher June sales in US. Tomorrow at 2:35 CET June Services and Composite PMIs will be released in Japan. The tentative outlook is positive.
Chinese shares slumped today and Shanghai Composite fell 3.4% even as China relaxed rules on margin trading before market open. On Wednesday stocks tumbled about 5%, recording more than 20% losses since mid-June. Even with recent declines China’s main stock market has almost doubled in value over the past year.
Oil prices are edging higher today after falling on Wednesday as US weekly oil inventories rose unexpectedly by 2.4 million barrels and reports indicate that the Organization of the Petroleum Exporting Countries have increased output in June.
Gold prices are falling today after closing at lowest level in a month as stronger dollar and rising equities lowered metal’s safe haven appeal. It appears that investors are discounting the negative impact of possible Greek exit from euro-zone.