US stocks closed higher as oil prices jumped on Monday. The dollar strengthened largely due to Pound’s decline on Brexit concerns. Live dollar index data indicate the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, was up 0.8% to 97.37. The Dow Jones Industrial Average advanced 1.4% to 16620.66. The United Technologies and UnitedHealth Group were the best performers among the Dow components gaining 4.7% and 3% respectively. The broad market index S&P 500 also rose 1.4% as all ten sectors ended in a positive territory led by energy stocks, up 2.2%. Chesapeake Energy and Freeport-McMoRan were the top performers, jumping 20% and 14% respectively supported by higher oil and commodity prices. The disappointing earnings season is coming to end with S&P 500 earnings expected to fall more than 3% in the fourth quarter. Home Depot and Target Corp are expected to announce quarterly results this week after the weak report of Wal-Mart last Friday. Markets shrugged off the negative economic report by Markit indicating manufacturing purchasing managers index fell to 51.0 from 52.4 in January instead of an expected increase.
Today at 15:00 CET December Case-Shiller House Price Index will be released. The tentative outlook is positive for the dollar. At 16:00 CET February Consumer Confidence index will be published by Conference Board. At the same time January Existing Home Sales will be published. The tentative outlook is negative.
European stocks closed sharply higher on Monday as market sentiment was buoyed by advancing oil and commodity prices. The euro weakened against the dollar with concerns about possible exit of UK from euro-zone and weaker-than-expected preliminary reports on economic activity weighed on the shared currency. The economic activity slowed for a second straight month in February as flash composite purchasing manager’s index fell to 52.7 from 53.6 in January. Markets discounted the news with the Stoxx Europe 600 closing up 1.7%. Germany's DAX 30 rallied 2% to 9573.59, while France’s CAC 40 index rose 1.8% and UK’s FTSE 100 added 1.5%. Shares of Anglo American PLC rallied 10.8%, Rio Tinto jumped 8.4% as higher metal prices lifted mining stocks. Today at 10:00 CET February Ifo Business Climate, Current Assessment and Expectations Indexes will be released in Germany. The tentative outlook is negative.
Asian stocks are retreating today as oil prices reversed after rebound on Monday. Chinese stocks are falling with Shanghai Composite Index down 0.96%. Nikkei fell 0.4% today as yen strengthened with lower oil prices. Yields on government bonds fell after a Finance ministry auction today with the benchmark 10-year yield down 1 basis point at minus 0.015%, continuing the decline after the Bank of Japan adopted negative interest rates on January 29.
Oil futures prices are falling today after sharp gains the previous day. April Brent crude jumped 5.1% to $34.69 a barrel on Monday on London’s ICE Futures exchange following Baker Hughes report that the number of active US oil rigs fell for the ninth straight week. International Energy Agency report projected US shale oil production could fall by 600,000 barrel-per-day this year and another 200,000 bpd in 2017. Traders are concerned that Iran will continue ramping up output after removal of western sanctions, which could unravel the agreement between Saudi Arabia and Russia to freeze output at January levels if other producers also do the same.
Gold prices are edging higher today after April futures fell 1.7% to $1,210.10 on Monday as global equities rebounded with rising oil prices.