US equities hit record high 16-08-2016 by IFC Markets
US stocks closed at record high on Monday as market sentiment was buoyed by the sharp rise in oil prices. The dollar weakened as mixed economic data pointed to lower likelihood of a rate hike this year. According to the live dollar index data the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, slipped 0.11% to 95.586. The Dow Jones industrial average climbed 0.3% settling at a record high 18636.05 with DuPont and Goldman Sachs shares leading gains. The S&P 500 rose 0.3% to 2190.15 led by gains in materials, industrial, and energy stocks. Seven of ten main sectors advanced while utilities, consumer staples and telecom sectors ended lower. The Nasdaq composite gained 0.6% to finish at 5262.02, its third record closing high in a row. The Dow Jones industrial average, the S&P 500 index and the Nasdaq composite index all closed at record highs on Monday for the second time since 1999. Better than expected earnings reports are driving the markets higher despite recent weak economic data such as low economic growth in the second quarter and weaker-than-expected retail sales and wholesale prices in July. The S&P 500's earnings recession that began in the third quarter of 2015 is on track to end in the fourth quarter, with profits estimated to grow 8.3% in the fourth quarter. In economic news the manufacturing activity in the New York region declined in August as the Empire State manufacturing index fell to negative 4.2 from 0.6 in July. Deteriorating manufacturing conditions give more reason for the Federal Reserve to wait longer before raising interest rates. The CME Group’s FedWatch tool shows Fed funds futures are pricing in just a 9% chance of a Fed hike in September, down from nearly 20% at the beginning of August. At the same time the Housing Market Index, which is used as an indicator of single-family home builder confidence, rose more than expected in August, a positive sign for increased construction. Today at 14:30 CET July Housing Starts, Building Permits and Consumer Price Index will be released in US. The tentative outlook is negative for the dollar. At 15:15 CET August industrial production will be released. The tentative outlook is negative.
European stocks closed slightly lower on Monday. The euro strengthened against the dollar while the Pound edged lower with further easing expected by the Bank of England. The Stoxx Europe 600 closed down less than 0.1%. Germany’s DAX 30 index closed 0.2% higher to 10739.21 as Volkswagen rose 1.1% after the auto maker said KBA, Germany’s federal motor transport authority approved technical fixes for 460000 vehicles with diesel engines. Market sentiment was supported also by German central bank’s announcement that Britain's vote to leave the European Union should have limited immediate economic impact on Germany. The DAX briefly turned positive for the year to date before closing to show a loss of less than 0.1% for the year. France’s CAC 40 closed down less than 0.1% to 4497.86, and the UK’s FTSE 100 rose 0.4% to end at 6941.19. Today at 10:30 CET July inflation will be published in UK, the tentative outlook is neutral for Pound. And at 11:00 CET August ZEW survey results for Germany and euro-zone will come out. The tentative outlook is positive for euro.
Asian stocks are edging lower today with yen advancing. Shanghai Composite Index is 0.47% lower while Hong Kong’s Hang Seng index is 0.01% up, and Australia’s All Ordinaries Index is down 0.14%. Nikkei ended 1.6% lower today at 16596.51 in thin trading as many investors were away for holidays. Toyota fell 1.26%, Honda lost 0.66% and Nissan dropped 1.73%.
Oil futures prices are rising today after prices settling sharply higher on Monday on expectations major producers may agree on production freeze at OPEC informal gathering late September. Russian Energy Minister Alexander Novak said yesterday Russia is consulting with the Saudis and other producers to jointly cap production “if necessary”. October Brent crude rose 2.9% to $48.35 a barrel on London’s ICE Futures exchange on Monday, the highest level since July 12.
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