US stocks fell on Wednesday as investor confidence was undermined by worries about slowing global growth and continued slide in oil prices. The dollar weakened after the release of minutes of Federal Reserve’s December meeting. The minutes revealed some policy makers had doubts about raising interest rates because inflation showed few signs of rising. Live dollar index shows the ICE US Dollar index, a measure of the dollar’s strength against a basket of six currencies, fell 0.2% to 99.16. The Dow Jones Industrial Average was down 1.3% at 16,906.51, the first close below 17,000 since October. The S&P 500 also lost 1.3% with all ten major sectors finishing in negative territory. Nasdaq Composite was lower 1.1%.
In economic news, the 257,000 new jobs added in December according to the Automatic Data Processing Inc report was the strongest gain in private-sector employment in 2015. Tomorrow the December non-farm payroll report will be published, and economists expect it will show that 200,000 new jobs were added. The Commerce Department reported that goods manufactured in US factories declined by 0.2% in November. Meanwhile, the Institute for Supply Management’s Services Index fell 0.6 percentage points to 55.3% in December. Today at 14:30 CET initial jobless claims and continuing unemployment claims will be released in US. At 14:45 CET Federal Reserve Bank of Richmond President Jeffrey Lacker will speak on economic outlook in Raleigh, North Carolina. And at 20:15 CET Federal Reserve Bank of Chicago President Charles Evans will speak on economy and monetary policy in Madison, Wisconsin.
European stocks closed sharply lower on Wednesday as investors were concerned about China’s economic slowdown indicated by the decline of purchasing managers index for China’s services sector to a 17-month low in December. The euro strengthened against the dollar after the release of the minutes from the Federal Reserve December policy meeting. The Stoxx Europe 600 index fell 1.3% despite a better-than-expected reading on the services sector in euro-zone: the final services PMI was revised up to 54.2 in December from the flash reading of 53.9. Germany’s DAX 30 closed down 0.9% , while France’s CAC 40 lost 1.3%. Today at 11:00 CET December Unemployment Rate and Retail Sales will be released in euro-zone. The tentative outlook is positive.
Nikkei tumbled 2.3% today after yen strengthened as China's central bank weakened the yuan. Exporters were hit hard with Toyota Motor (N:TM) dropping 2.6%, Honda Motor (N:HMC) sinking 3.1% and Panasonic (OTC:PCRFY) falling 2.3%.
China’s central bank surprised markets today by setting the official midpoint rate for the currency at 6.5646 yuan per dollar, 0.5% weaker than the day before. Chinese stocks fell sharply. The CSI 300, a benchmark index of blue chips in Shanghai and Shenzhen, fell 7% about 30 minutes after markets opened. Trading was halted then for the rest of the day. Asian markets fell also.
Oil futures prices are extending losses today after settling on Wednesday at lowest levels since 2004. Investors are concerned about growing global glut as weakening Chinese economy is expected to slow the global demand growth while major producers show no sign of cutting crude oil output. US data showed crude inventories dropped by 5.1 million barrels last week, but gasoline inventories jumped and oil production climbed 17,000 barrels-per-day.
Gold futures prices are extending gains today for the fourth session in a row as falling equities and concerns about the Chinese economy boosted the demand for safe- haven metal.