US stocks rose on Monday for the fifth session in a row. The dollar strengthened, with the ICE US dollar index, a measure of the dollar’s strength against a basket of six currencies, edging up 0.3%. S&P 500 rose 1.8% as rising oil lifted energy stocks and biotechnology stocks rebounded. Friday’s disappointing job report led investors believe that Federal Reserve will not raise rates this year shifting market sentiment along the pattern “ a bad news is good news”. According to the CME Group’s FedWatch program traders of fed-funds futures market on Monday were pricing in a 7% probability of a rate increase in October, down from 14% Thursday before the weak jobs report. Boston Fed President Eric Rosengren said notwithstanding the weak September employment report he would support rate hike by the end of the year if future data come in sufficiently strong. Trading volume was 7.86 billion shares on US exchanges, about 7.6% above the average for the previous 20 sessions. Today at 13:300 CET August Trade Balance will be released in US. The tentative outlook is positive. At 15:00 CET Investor's Business Daily and TechnoMetrica Institute of Policy and Politics Economic Optimism index will be published. The tentative outlook is positive. At 22:30 CET Federal Open Market Committee voting member Williams will speak on US economic outlook in San Francisco.
European stocks rallied on Monday. Euro weakened against the dollar. The Stoxx Europe 600 index jumped 3% recording its strongest one-day percentage gain since late August. Oil companies advanced as oil prices rallied 2.5%, with shares of Royal Dutch Shell jumping 5.2%, Total SA rising 4.2%, and BP gaining 4.7% despite the news that it has agreed to pay $20.8 billion to settle US civil suits over the 2010 oil spill in the Gulf of Mexico. Glencore rallied 21% on news it is in talks to sell off assets to reduce its debt. In economic news the services sector in euro-zone expanded less than expected in September, with the final purchasing managers index for the sector dropping to 53.7 from 54.4 in August. The composite PMI for euro-zone fell to 53.6 in September, down from 54.3 in August.A reading above 50 signals expansion. Today September Retail PMIs for Germany, France, Italy and euro-zone were released by Markit, all advancing from previous month except for Germany where Retail PMI expanded at a slower pace coming in at 54.0 after 54.7 in August.
The Nikkei gained 1% today as market sentiment improved on news of a basic agreement on the Trans-Pacific Partnership trade pact and expectations of interest rate hike delay by Federal Reserve. The Bank of Japan has started its two-day policy meeting today and is expected to hold monetary policy steady. Tomorrow at 04:00 CET Bank of Japan Policy Statement will be released and afterward Governor Kuroda’s press conference will start. At 06:00 CET August Leading Indicators will be released. The tentative outlook is negative.
The Reserve Bank of Australia kept rates at a record low of 2% today as widely expected, and said Australian dollar is adjusting to lower commodity prices.
Oil futures are edging lower today after gaining more than 2% on Monday as gasoline prices rose and Russia said it was prepared to meet OPEC and non-OPEC oil producers to discuss the market.