US stock market retreated on Wednesday as energy and materials stocks dragged market indexes lower pressured by declining oil. The dollar strengthened as St. Louis Fed President James Bullard expressed his support for a rate hike in April to prevent an inflation overshoot of Fed’s 2% target if another strong jobs report indicates further tightening of labor market. Philadelphia Fed President Patrick Harker earlier had said he would prefer at least three hikes before year end. The live dollar index shows the ICE US Dollar index rose 0.4% to 96.031. The Dow Jones Industrial Average fell 0.5% to 17502.59. Nike (NYSE:NKE) was the worst performer among its constituents, down 3.8%. The S&P 500 lost 0.6% to 2036.71, erasing its modest year to date gains and finishing 0.4% lower in 2016. Nine out of ten main sectors ended lower with energy stocks leading the decliners, down 2.1%. Markets shrugged off the positive report of 2.1% rise in new home sales in February. Trading was low ahead of Easter holiday. US financial markets will be closed tomorrow on Good Friday.
Today at 13:30 CET Initial Jobless Claims and Continuing Claims will be released in US. At the same time February preliminary durable goods orders will be released. The tentative outlook is negative. At 14:45 CET March preliminary Manufacturing PMI will be released by Markit. The tentative outlook is positive. At 15:30 CET Natural Gas Storage Change will be released by the Energy Information Administration.
European markets closed lower, erasing earlier gains, as falling oil and metals prices pushed mining stocks lower. The euro weakened to $1.1181 compared with $1.1217 late Tuesday. The Stoxx Europe 600 index slid 0.1% for a third loss in a row. Miners Anglo American (LON:AAL) and Glencore (LON:GLEN) dropped 5.4% and 4% respectively. Travel-related stocks recovered after losses following Brussels terror attacks on Tuesday. French hotels group Accor (PA:ACCP) added 0.2%, Air France KLM (PA:AIRF) gained 0.7% and budget airline Ryanair Holdings (LON:RYA) rose 2.6%.
Germany’s DAX 30 gained 0.3% helped by weaker euro, France’s CAC 40 fell 0.2% and UK’s FTSE 100 edged up 0.1%. Major exchanges in London, Paris and Frankfurt will be closed tomorrow on Good Friday and on March 28, the Monday after Easter. Today at 11:00 CET Gfk German Consumer Confidence Survey results for April will be published. The tentative outlook is neutral for euro. At 13:00 CET the ECB Economic Bulletin will be published. And at 13:30 CET February Retail Sales will be released in UK. The tentative outlook is negative for pound.
Nikkei fell 0.6% today despite weaker yen, as falling commodity prices weighed on commodity stocks. Trading house Mitsui tumbled 7.5% on news the company will report its first net loss as it will have to book writedowns worth $2.30 billion, due to a slide in energy and metal prices. Japan’s government lowered its assessment of the economy in March for the first time in five months due to weakness in consumer spending, while it upgraded its assessment of capital expenditure and exports. The government will start spending a $27 billion stimulus package this month, which includes an increase in cash handouts to pensioners. There are talks among ruling party politicians that even more stimulus is needed to prevent a return to deflation after Japan's economy shrank an annualized 1.1% in October-December.
Oil futures prices are extending losses today after US stockpiles rose for the sixth week. May Brent crude fell 3.2% to $40.47 a barrel on London’s ICE Futures exchange on Wednesday. The US Energy Information Administration reported on Wednesday a bigger than expected 9.4 million barrel jump in crude oil supplies to a record high of 532.5 million last week, with domestic oil production down by 30,000 barrels to 9.038 million barrels a day. Traders are waiting for the meeting of major oil producers on April 17 where a freeze in supply at January levels will be discussed. International Energy Agency senior executive yesterday questioned the effectiveness of a possible decision to freeze the output by pointing out that Saudi Arabia is the only country with the ability to increase output.