US stocks rose on Monday as the market rebounded after Friday’s selloff following Federal Reserve’s decision on September 17 to keep the rates unchanged. The dollar strengthened, with the ICE US dollar index, which measures the dollar’s strength against a basket of six currencies, rising 1.1%. Bullish comments by Atlanta Fed President Dennis Lockhart that a rate hike later this year is “still operative” bolstered investor confidence in the strength of US economy which was undermined by Fed’s decision not to hike rates due to increased uncertainty about global economy.
Earlier Monday morning, St. Louis Fed Chief James Bullard also defended the case for raising interest rates in October due to an improving domestic economy. The S&P 500 closed 0.5% higher led by financial and technology stocks. The biotechnology stocks fell after US Democratic presidential candidate Hillary Clinton said she would announce a plan to stop excessive pricing for specialty drugs. Trading was thin at 6.5 billion shares traded on US exchanges, about 21% below the daily average for the past 20 trading days.
In economic data, Existing Home Sales declined 4.8% in August to an annualized rate of 5.31 million units. The report had little impact on markets. Today at 14:00 CET July House Price Index will be published. The tentative outlook is positive. At 15:00 CET September Richmond Fed Manufacturing Index will be released. The tentative outlook is positive. And at 23:30 CET FOMC member Lockhart speaks on economy in Alabama.
European stocks closed higher on Monday rebounding from the steepest one-day loss in two weeks on Friday. The euro weakened against the dollar after Peter Praet, executive board member and chief economist of the European Central Bank, said the ECB is ready to expand its program of asset purchases. The ECB is currently buying €60 billion ($68 billion) in public and private debt every month in the framework of the QE program expected to end in September 2016.
The reelection of Syriza in Greece bolstered market sentiment, as the party led by Prime Minister Alexis Tsipras is expected to continue the economic reforms international creditors insisted on as a condition for the Greek bailout. The STOXX Europe 600 rose 0.9%. German DAX underperformed as it rose only 0.33%, held back by declining auto stocks after Volkswagen (OTC:VLKPY) fell as much as 22.8% on news that it falsified US emissions tests.
Today at 15:00 CET September Consumer Confidence Index will be published in eurozone. The tentative outlook is negative. Tomorrow at 08:30 CET September Manufacturing, Services and Composite PMIs for Germany will be released by Markit. At 9:00 CET the respective PMIs for eurozone will be released. The tentative outlook is negative.
Chinese stocks advanced for a third day today with Shanghai Composite Index gaining 0.9% as investor optimism was buoyed by hopes over President Xi Jinping’s state visit to the US. Volatility is still high as China’s economy is slowing down as evidenced by recent manufacturing data and investors are uncertain how long the state will continue providing support to market through state backed funds.
Oil futures prices are declining today after they recovered on Monday most of the loss from a steep decline on Friday. Prices advanced after reports indicated US output could fall as oil and natural gas projects worth around $1.5 trillion are at risk because of the slump in oil prices.