IFC Markets - Analytics

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    Markets advance on prospect of slower rate hikes

    US stock market advanced on Wednesday supported by dovish comments from Federal Reserve Chair Janet Yellen and a rise in oil prices. The dollar weakened further as Yellen stressed the need for the central bank to be cautious about rate increases. The live dollar index shows the ICE US Dollar index edged down 0.3% to 94.837. The Dow Jones Industrial Average rose 0.5% to 17716.66, posting record 17 gains in a month since March 2010. The S&P 500 closed up 0.4% to 2063.95 as investors sold safer bonds and bought riskier stocks on expectations of lower yields on Treasuries as Yellen signaled slower pace of monetary tightening. The Nasdaq Composite also advanced 0.5%. In economic news the ADP report indicated the private sector added 200,000 jobs in March, slightly lower than the previous month’s revised 205,000 increase.

    Tomorrow the nonfarm payrolls are due and analysts expect 210 thousand new jobs were created in March. Today at 14:30 CET Initial and Continuing Jobless Claims will be released in US. The tentative outlook is positive for the dollar. At 15:45 CET March Chicago PMI will be released. The outlook is positive. At 23:00 CET Federal Reserve Bank of New York President William Dudley speaks on Federal Reserve policy in Lexington, Virginia.

    European stocks closed higher on Wednesday after Federal Reserve Chair Janet Yellen indicated the pace of interest rate hikes will remain slow. The euro strengthened to $1.133 compared with $1.1287 late Tuesday after Yellen’s dovish comments. The Stoxx Europe 600 index advanced 1.3%, rising for a second straight day. Basic materials and oil stocks were the best performers. Anglo American PLC rallied 12%, Glencore PLC jumped 5.4%. Germany’s DAX 30 gained 1.6% to 10046.61. France’s CAC 40 rose 1.8% and UK’s FTSE 100 gained 1.6%.Today at 09:55 CET March Unemployment Change will be released in Germany. The tentative outlook is positive for the euro. At 10:30 CET final fourth quarter GDP and Current Account will be released in UK. The tentative outlook is negative for the Pound. At 11:00 CET advance March inflation will be published in euro-zone. The tentative outlook is negative for the euro.

    Asian stocks are rising today as investor appetite for riskier assets was boosted by a prospect of lower interest rates for longer indicated by Federal Reserve Chair Janet Yellen comments. Chinese shares are rising with Shanghai Composite Index up 0.3%, poised to record a quarterly drop of about 15%. Nikkei fell 0.7% today as exporter stocks were sold off as yen continued strengthening against the dollar and institutional investors refrained from making big bets on the final day of Japan's financial year.

    Oil futures prices are retreating today after edging higher on Wednesday following US Energy Information Administration report of a lower than expected 2.3 million-barrel rise in US crude oil supplies and a 16000 barrels a day decline in domestic oil output. May Brent crude rose 0.3% to $39.26 a barrel on London’s ICE Futures exchange. Investors are worried global glut is not subsiding after inventories in the United States rose to a record high 534.8 million barrels and a monthly Reuters survey showed the Organization of the Petroleum Exporting Countries likely produced 100,000 barrels per day more in March. On the backdrop of rising inventories Iran is boosting supply after the lifting of export sanctions, while near-record shipments from southern Iraq offset maintenance and outages among smaller producers.

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