US stocks extended losses on Tuesday after Atlanta Fed President Lockhart said a September interest rate hike is likely unless there is a significant deterioration in the economy. The dollar strengthened, with the ICE US Dollar Index, a measure of the dollar’s strength against a basket of six currencies, finishing 0.4% higher. TheS&P 500 and Nasdaq Composite slipped 0.2%. Investors will be watching closely the upcoming job market reports as policymakers indicated in the last Fed policy meeting they will raise interest rates after further improvement in labor markets. Apple fell 3.21%, closing below the 200-day daily moving average at $114.64. American International Group fell 2.82% after missing earnings expectations, while home and auto insurer Allstate fell 10.15% after reporting lower-than-expected profits. About three-quarters of S&P 500 companies have reported earnings this season and analysts now forecast a 2.8% drop in second-quarter earnings, better than a 6.4% fall expected about three weeks ago. Factory Orders in June increased 1.8%, in line with expectations. Today at 12:00 CET Mortgage Applications will be released in US. At 13:15 CET July ADP employment change will be released. The tentative outlook is negative. At 13:30 CET June trade balance will be released. The tentative outlook is negative. At 15:00 CET July final ISM non-manufacturing composite index will be released. The tentative outlook is positive.
European stock markets retreated on Tuesday on disappointing earnings reports. The euro traded lower. The Stoxx Europe 600 closed down 0.17%, Germany’s DAX 30 finished up 0.1%, while France’s CAC 40 slipped 0.2%. Greece is seeking to reach a deal for 86 billion euros ($94.5 billion) bailout with creditors by August 20 to pay off a European Central Bank debt of 3.5 billion euros that matures on that day, and European Commission described the progress in negotiations as encouraging. BMW dropped 1.3% after the German car maker reported a decline in second-quarter profit due to slowing China sales. Banking shares were hit. At 10:00 CET July retail sales will be released in euro-zone. The tentative outlook is negative. Tomorrow at 7:00 CET June factory orders will be released in Germany. The tentative outlook is positive. At 8:30 July Markit Construction PMI will be released. At 9:10 CET July Markit retail PMI will be released in Germany, Eurozone, France and Italy.
Nikkei gained 0.5% today as yen edged lower and construction companies and real estate developers reported better-than expected earnings. Tomorrow at 00:50 CET financial data on foreign and domestic purchases of bonds and stocks will be released in Japan. At 06:00 CET August leading and coincident indexes will be published. The tentative outlook is positive.
Chinese stocks are falling today on concerns government intervention such as trading halts, regulatory measures to curb short selling and a suspension of initial public offerings is driving away investors. A total of 515 mainland companies, or 18 percent of all listings, remain halted from trading.
Oil is edging higher today after rebounding on Tuesday following Monday’s slump. Investors expect the Energy Information Administration report today at 15:30 CET US will show a decline in US weekly inventory.
Gold is slipping today following the bullish remark of Fed President Lockhart. We believe the July jobs report will provide some direction for the safe haven asset as the data will indicate whether the labor market dynamics supports the September rate hike scenario.