European equities edged higher on Tuesday, supported by better than expected May service activity indicator in US. Stoxx Europe 600 gained 0.3%, Spanish IBEX 35 soared 0.5% and French CAC jumped 1.1%. Greece extended its sharp drop and plunged 5.1%. UK markets were closed for a holiday.
US stocks traded slightly better on Wednesday after data showed ISM index for service businesses surged from 53.5 in April to 53.7 in May. S&P 500 index advanced 0.57% or 7.32 points and finished at 1,285.50. Dow Jones Industrial Average climbed 0.22% or 26.49 points to 12,127.95 and Nasdaq Composite gained 0.66% or 18.10 points to 2,778.11.
The credit rating of Commerzbank AG, the second largest lender in Germany, was cut by one level to A3. In total Moody's lowered ratings for three banks in Austria and seven banks in Germany. Moody's Investor Service is reviewing also Deutsche Bank AG.
Canadian currency appreciated on Tuesday after central bank officials announced they may increase interest rates as local economy is rebounding as predicted despite global uncertainty. Canadian Dollar added 0.1% versus its US peer to CAD 1.0381. Currently USD/CAD is trading at CAD 1.0336.
Australian national currency surged on Wednesday after data showed country's GDP grew more than twice in the first quarter of 2012. Aussie added 0.7% versus greenback to USD 0.9862 while Kiwi advanced 0.8% to USD 0.7624. Currently AUD/USD is trading at USD 0.9840 and NZD/USD is trading at USD 0.7613.
ECB may move closer to reducing borrowing costs to a record low as the European turmoil deepens threatening to curb global economy. While majority of economists surveyed by Bloomberg predict that Mario Draghi and other ECB officials will leave key interest rate unchanged at 1%, some predict a quarter point cut and one expects even half-point reduction. ECB is facing
Australian economy expanded at much faster pace than expected, pushing Australian Dollar, stocks and borrowing costs higher and reducing scope for RBA for further interest rate cuts. Australia's GDP surged 1.3% in the first quarter compared to a 0.6% gain in the fourth quarter. Analysts expected a similar increase as in previous three months at 0.6%.
Spain is likely to seek financial aid from Europe to support its ailing banks, as the country is losing access to financial markets due to increasing interest rates on Spanish bonds, according to the Budget Minister. The Eurozone policy makers developed measures to contain Spain's deepening financial crisis ahead of EU summit in Brussels at the end of June.
On Tuesday, futures for crude oil fluctuated around USD84, finding support from U.S. service growth data, which appeared to be unexpectedly good; and also being affected by investors' consciousness about Eurozone. July delivery futures for sweet crude oil peaked at USD84.03 per barrel, consolidating at the level of USD84.03.
The Euro was traded lower versus the U.S. dollar on Tuesday, as service sector data foe the U.S. appeared to be better than expected, and talks in G7 did not bring any breakthrough results. EUR/USD peaked at 1.2411 in the U.S. trading session, later consolidating at 1.2445. The support for the pair was likely to be at 1.2335, and resistance was prone to be at
Futures for natural gas were growing for the second day in a row during the U.S. morning trading session, as weather forecasts predicted warm weather in key regions of the U.S., thus, boosting short-term demand expectations for natural gas. July delivery futures were traded, On the NYMEX, at USD2.461 per MMBtu.
Congressional Budget Office reported in a new budget outlook that U.S. federal budget will top 70% of country's GDP already by the end of this year. This will be the highest ratio since shortly after WWII. According to CBO, if laws will stay unchanged, in 2037 federal health-care would cost close to 10% of GDP, up from 5% now. The debt is then expected
After the news on PMI services index modest increase to 53.7 in May, Treasury prices stayed down resulting in 10-year note yields of 1.57%. The euro lost 0.41% against the dollar falling to USD 1.2449. The dollar index gained 0.27% versus a basket of 6 major currencies to 82.78.
June is the 14th month in a row for benchmark interest rate to remain unchanged. The central bank, in its statement, said that it was leaving the overnight cash rate at 1.00%, which absolutely corresponded with expectations. The central bank also added that as the situation becomes better, some monetary policy stimulus could be withdrawn, but these decisions will be weighed thoroughly.
The Institute for Supply Management announced that Non-Manufacturing Purchasing Managers' Index rose 0.2, to 53.7 in May from 53.5 in April. Economists predicted the index to reach 53.6 last month. Any figure above 50.0 indicates industry expansion, below indicates contraction. On this news stocks climbed. Dow Jones Industrial Average added 0.10%, S&P 500 gained 0.33% and Nasdaq Composite rose 0.46%.
While March figure was revised upwards by 1% to 3.2%, April results fell short of expectations – a drop in factory orders by 1.9% instead of an expected 1% contraction. The ministry thinks that this decline should be treated just as a correction of strong March figures. The fall is attributed to decreasing foreign demand, because foreign orders tumbled 3.6%, while domestic orders advanced 0.4%,
Cristobal Montoro, Spain's Treasury Minister, said that taking into consideration the massive borrowing expenses faced by Spain, the country cannot gain access to the private bond market. As the risk premium is drastically high, it prevents Spain from entering the markets in case of the necessity to refinance debt. Montoro believes, since the banks in Spain do not require a considerable sum for recapitalization, the
As Standard & Poor's stated that there is a 33% chance that Greece may leave the 17-nation area, China began drafting all possible scenarios that may be detrimental for the country. According to China Daily, the government will consider how the exit may influence the commerce, rate of exchange as well as the investment flow. However, the main concern of China lies not in
On Tuesday, Statistic Canada reported that the amount of permits for new buildings issued in Canada slumped 5.2% in April, which is significantly more than an anticipated 2.0% decline. This outweighs strong gains during previous month, when the figure grew revised 4.9%.
Eurostat reported on Tuesday that Eurozone retail sales decreased by 1% in April, which is more than an expected 0.1% drop. This added to concerns over Eurozone's economic outlook. In March, retail sales gained 0.3%, however, this figure is unrevised yet. At the same time year-on-year decrease of retail sales was 2.5% in April.
As the euro crisis continues to progress, the Eurozone manufacturing as well as services output experienced a drop at the most rapid rate during the period of three years. According to the statistics by Markit Economics, the EC Composite PMI Output index in both sectors maintained below 50 during the past 4 months with the last figures being 46.7 and 46 for April and May,
Although European markets mostly rose on Tuesday as investors awaited the outcome of G-7 meeting, German stocks prolonged their losses. German DAX edged down almost 0.7% after data showed German Factory Orders plunged 1.9% instead of a drop of 1%. Moreover Spanish budged minister Montoro called for aid for Spain. Utilities weighed on the index with RWE AG sinking 1.4%
Rural commodities apart from sugar moved higher on Monday as weather conditions in the US key growing regions deteriorated.Wheat advanced by more than 2%, rising for the first time in the last five trading sessions. Brighter demand prospects after Iran reported it plans to import 50,000 MT of wheat spurred the commodity price.Corn climbed the most in the last two
Energy markets were solid on Monday amid QE hopes in the US and China. Meanwhile, energy prices are expected to remain volatile ahead of G7 emergency call conference due on Tuesday.Crude oil rose on bargain buying and expectations for drop in the US inventories last week. Moreover possible monetary easing in the US and China boosted demand prospects.Brent oil gained