US markets retreat as dollar falls - 9.6.2015

US stocks fell on Monday for third session in a row amid concerns the Fed may hike rates sooner than expected after Friday’s upbeat jobs report. The Dow Jones Industrial Average lost 0.5% and closed in negative territory for 2015. The S&P 500 fell 0.7%, still recording 1% gain for 2015. The stronger-than-expected May jobs data fueled investor concerns about possible Fed rate hike in September. Investors are now looking forward to Thursday’s retail sales report. Strong retail sales data in line with markets expectations will confirm solid economic growth indicated by May jobs report and reinforce expectations for interest rate hike. US dollar fell on reports refuted later that President Obama had expressed concern at G7 meeting about dollar’s strength. The ICE US dollar index, a measure of the dollar’s strength against a basket of six currencies, fell 1.1% to 95.2870. Today at 14:00 CET the National Federation of Independent Businesses May Small Business Index will be released in US. At 15:00 CET the April Job Openings and Labor Turnover Summary will be released by the Labor Department. The tentative outlook is positive for the dollar. At the same time April Wholesale Inventories and Trade Sales will be released. The tentative outlook is neutral.

European stocks slipped on Monday as uncertainty over Greek debt negotiations weighed on market sentiment. The Stoxx Europe 600 index lost 0.9%, falling for a fifth straight trading session. Greek government said it was ready to negotiate a settlement acceptable to both sides by the end of this month. Greece’s international creditors have suggested extending the country’s bailout program until the end of March 2016, but there is no progress in negotiations over the reform measures such as raising taxes and cutting pensions. The euro strengthened 1.5%, weighing on exporter stocks. Germany’s DAX 30 index fell 1.2% and is now in correction territory as it dropped 10% from its closing peak in April. It should be noted that the economic stimulus measures of the European Central Bank weakened euro and pushed European shares higher earlier this year, providing also a cushion against negative impact of Greece’s debt problems. No important economic data are expected in euro-zone today. Today at 9:30 CET April Trade Balance data will be will be released in UK. The tentative outlook is positive for the Pound.

Nikkei dropped 1.8% today as yen rebounded from 13-year low it hit against the dollar on Monday. Market sentiment was undermined by talks about possible rate hike in September and imminent Greek default and exit from euro-zone if no deal is reached in negotiations about extension of the bailout program in return for more reforms. Tomorrow at 0:50 CET Machinery Orders and Corporate Goods Price Index for April will be released in Japan. The tentative outlook is negative.

China’s consumer inflation fell more-than-expected to 1.2 % year-on-year in May.

Oil prices fell on Monday as data indicated Chinese oil imports fell 11% in May from a year earlier. The negative impact of falling demand from one of the world’s biggest oil importers outweighed the positive report from the Energy Information Administration stating oil production from seven major US shale plays is expected to fall by 91 thousand barrels-a- day in July from June.

Gold prices rebounded on Monday as dollar weakened and equity markets retreated.