US stocks edged lower on Wednesday after Federal Reserve Chair Janet Yellen testified to House Financial Panel, reiterating the Fed will increase rates this year. The dollar advanced, the ICE Dollar Index rose 0.5%. The energy sector was the worst performer among 10 main sectors as decline in energy shares outweighed gains in financial stocks. Treasury yields fell after Fed Chair Yellen testified that an interest rate hike will likely be warranted by the end of the year. Market participants expected Fed would raise interest rates in September or December, and Yellen’s comments were interpreted as less hawkish than the FOMC view. Thus, FOMC voting member Williams said on Wednesday the Federal Reserve could start raising rates as soon as September and lift them once more before the end of the year. Second quarter corporate earnings reporting season has started and US companies are expected to report worst sales declines in nearly six years, while corporate profit is expected to have fallen 2.9 percent. After the market close Intel rose 5.4% and Netflix surged 10.4%. US producer prices increased more than expected, recording 0.4% rise against 0.2% expected gain, and industrial production growth at 0.3% m-o-m was better than the expected 0.2% increase. Today at 13:30 CET Initial Jobless Claims and Continuing Claims will be published in US. The tentative outlook is positive. At 15:00 CET Fed Chair Janet Yellen will testify to Senate Banking Committee. At the same time Philadelphia Fed Manufacturing index and National Association of Home Builders housing market index for July will be released. The tentative outlook is negative.
European stocks closed higher on Wednesday as investors’ focus was on Greece where Prime Minister Tsipras faced the task of convincing his party and Greek parliament to approve the bailout deal. The euro weakened. The Greek parliament approved the austerity measures demanded by euro-zone creditors as a condition for opening talks on third bailout package. Tsipras said in his appeal Greece needed restructuring of its debt. The European Commission on Wednesday proposed extending a 7 billion euro bridge loan to Greece from an emergency-funding program run by the European Union. If approved by the 28 members of the EU, Greece could meet its immediate funding needs, including a repayment of 3.5 billion euros due Monday to the European Central Bank. Today at 10:00 CET euro-zone trade balance for May and June consumer price index will be released. The tentative outlook is negative. At 12:45 CET European Central Bank interest rate decision will be announced, no change in policy is expected, and at 13:30 CET ECB press conference will start.
Nikkei rose 0.7% today as yen weakened against the dollar after Yellen’s testimony overnight, and market sentiment was buoyed by Greek parliament’s approval of austerity measures.
Chinese stocks are rising today after measures by authorities to increase scrutiny over gray-market margin financing through trusts and peer-to-peer lending has driven many funds out of market, while trading of 691 stocks was still halted.
Oil prices are rising today after official report US crude inventories fell 4.3 million barrels last week as refineries boosted throughput, but the outlook is bearish as global oversupply persists.
Gold prices are falling today after Fed Chair Janet Yellen confirmed the central bank plans to raise rates this year.