US stocks retreat on earnings concerns 12-10-2016 by IFC Markets
US stocks decline on disappointing Alcoa report
US stocks fell on Tuesday as disappointing Alcoa report spurred concerns over corporate earnings recession and oil decline undermined market sentiment. The dollar strengthened.
The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.8% higher at 97.681 Tuesday. The Dow Jones industrial average lost 1.1% to 18128.6 led by shares of Merck and UnitedHealth Group. The S&P 500 fell 1.2% settling at 2136.73 with all of its main sectors ending lower led by health-care and materials stocks. The Nasdaq index lost 1.5% to 5246.79. Alcoa shares tumbled more than 11% after a big miss on earnings, spurring concerns falling corporate earnings will weigh on stock prices when Federal Reserve has indicated it plans to raise rates soon. In a speech in Australia Federal Reserve of Chicago President Charles Evans said the US economy is on a sound footing and he wouldn’t be surprised by a December interest-rate hike. Currently fed fund futures market is pricing about 69% chance of a rate hike this year, according to CME Group’s FedWatch tool. Economic data were weak on Tuesday: National Federation of Independent Business Small Business Index and Fed’s Labor Market Conditions Index fell in September. Today at 13:00 CET Mortgage applications will be released by the Mortgage Bankers’ Associations in US. At 16:00 CET August Job Openings and Labor Turnover Summary will be released. The tentative outlook is negative. And at 20:00 CET September 20-21 FOMC Meeting Minutes will be released.
Brexit uncertainty weighs on European stocks
European stocks closed lower on Tuesday tracking oil lower with only consumer goods stocks recording gains led by luxury shares. The euro and while the British Pound weakened against the dollar. Pound fell to $ 1.2086 on continued concerns about the negative impact of Brexit on UK economy.
The Stoxx Europe 600 index lost 0.5%. Energy stocks were the worst performers: Norway’s Statoil and Italy’s Eni lost 1.9%. The DAX 30 lost 0.4% to 10577.16 while France’s CAC 40 fell 0.6%. UK’s FTSE 100 closed down 0.4% settling at 7070.88 after hitting its highest intraday level. Markets shrugged off positive economic news: euro-zone ZEW Economic Sentiment Index jumped to 12.3 in October from 5.4 in September. Investors are clearly concerned the fallout from Brexit settlement which may negatively impact not just UK’s access to euro-zone common market but the euro-zone economy. Today at 11:00 CET August Industrial Production will be published in euro-zone, the outlook is positive for euro.
Asian stocks tack Wall Street
Asian stocks are falling today with Japanese stocks leading the decline as investor confidence was hurt by Wall Street losses overnight. The Nikkei finished 1.1% lower at 16840.00 today, with Bank of Japan policy makers signaling they do not intend to ease policy at the central bank's next rate review. Chinese stocks are retreating too as weaker yuan reduces the appeal of Chinese assets: the Shanghai Composite Index is 0.2% lower with Hong Kong’s Hang Seng index down 0.9%. Australia’s All Ordinaries Index slipped 0.13% with Australian dollar recovering most of the previous day’s loss against the greenback.
Higher Indian imports lift oil
Oil futures prices are inching higher today ahead of a meeting in Istanbul between OPEC producers and other oil exporters on curbing crude oil output. Reports India's oil imports rose to record high in September also supported oil. Prices fell yesterday after the International Energy Agency reported OPEC boosted its output by 160000 barrels a day to a record 33.64 million barrels a day in September. Investors hope an agreement can be reached to limit the output but such an arrangement would require Russian Rosneft oil company to curb its current output. Russian Energy Minister Alexander Novak said at Istanbul conference yesterday that the world's top producer would maintain its current oil output unchanged under a deal. December Brent crude finished 1.4% lower at $52.41a barrel on London’s ICE Futures exchange on Tuesday.
Precious metals rebound
Gold is inching higher today as dollar is pulling back ahead of the release of the Minutes of the Federal Reserve Open Market Committee's September meeting. A weaker dollar makes dollar-denominated gold less expensive for buyers who use other currencies. Spot gold is up 0.3% at $1256.20 after falling 0.5% on Tuesday. Gold has been under pressure with increased likelihood of a rate hike by Federal Reserve, despite support from seasonally high demand for the metal in October. Among other precious metals, platinum is little changed at $947.30 an ounce, having touched an over-six-month low of $943.36 an ounce. Silver gained 0.55% to $17.52 an ounce rebounding from 1% decline in the previous session.
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