US stocks extended losses on Wednesday as market sentiment remained subdued after falling manufacturing PMI reading for September pointed to slowing growth in China. The dollar weakened slightly with the ICE US dollar index, which measures dollar’s strength against a basket of six major currencies, falling 0.1%. The S&P 500 ended lower 0.2%, with materials and energy stocks leading the decline. S&P 500 earnings are projected to decline 3.9% in the third quarter from a year ago. Boeing (NYSE:BA) said it had won orders and commitments from China for aircraft valued at about $38 billion at list prices. Investors are cautious amid concerns over deteriorating global growth outlook and uncertainty over when Federal Reserve may raise interest rates. Atlanta Federal Reserve bank president Dennis Lockhart said on Wednesday investors should focus on the strength of the US economy as indicated in Federal Reserve’s policy statements rather than the more remote risks of a global slowdown. Today at 22:00 CET Fed Chair Janet Yellen will be speaking on inflation at University of Massachusetts, Amherst. Market participants will be watching closely for clues whether the Federal Reserve remains on track to raise interest rates this year or the interest rate hike may be delayed until next year in the light of the risks for US economy from slowing overseas markets. In economic data Markit report showed US manufacturers had the slowest pace of growth in September in 22 months. Today at 13:30 CET Initial Jobless Claims and Continuing Claims will be released in US. At the same time August Durable Goods Order will be published. The tentative outlook is negative. At 15:00 CET August New Home Sales will be released.
European stocks rose on Wednesday as investor optimism was buoyed by economic reports indicating euro-zone economy was on recovery track. Euro strengthened against the dollar after European Central Bank President Mario Draghi said at a European Parliamentary hearing that the central bank stands ready to expand its program of quantitative easing but didn’t provide any indication of immediate action plans. The STOXX 600 rose about 0.1%. Markit data indicated growth in euro-zone’s manufacturing and services sectors slowed as composite purchasing managers index fell to 53.9 in September from 54.4 in August, but new orders reached a five-month high. Germany’s DAX 30 closed up 0.4% as Volkswagen (XETRA:VOWG) shares finished 5.2% higher after two days of double-digit percentage declines. Today at 09:00 CET German Ifo survey results for September will be published in euro-zone. The tentative outlook is negative for euro.
Japanese markets reopened today after a three-day national holiday and Nikkei 225 fell 2.8% on weak Chinese and US manufacturing reports as yen strengthened against the dollar. Machinery stocks were hit hard with Okuma Corp. (TOKYO:6103) sinking 9.1% and Makita Corp (OTC:MKTAY) tumbling 7.8 %. Tomorrow at 0:30 CET August Consumer Price Index will be released in Japan. The tentative outlook is negative.
Chinese stocks rose today with Shanghai Composite Index gaining 0.8% in thin trading.
Oil futures prices are rebounding today after settling sharply lower on Wednesday on lower than expected decline in US crude oilstockpiles and large buildup in gasoline stocks. While US shale output has started to decline recently the long term supply and demand fundamentals remain weak with supply expected to outpace the growth in global demand.