US stocks closed higher on Monday supported by higher oil prices while Federal Reserve Chair Janet Yellen said a rate hike is still possible despite the disappointing May jobs report. The dollar ended little changed: the live dollar index data indicate the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, closed at 93.985 compared with Friday’s close at 93.951. The S&P 500 index advanced 0.5% to highest close in 2016 at 2109.41 led by a 2% gain in energy stocks. The Dow Jones Industrial Average added 0.6% to close at 17920.33 helped by a 3.6% jump in Boeing (NYSE:BA) shares on news Iran intends to buy over 100 jets from the aerospace giant. Janet Yellen said future interest rate hikes would be appropriate as rising employment, household incomes, and consumer confidence indicate the domestic economy is in relatively good shape but omitted the phrase “in the coming months” that appeared in her May 27 speech. She did mention external risk factors for US economy like the UK exit from the European Union and China’s economic slowdown, and reiterated the timing of hikes will depend on incoming economic data.
However there doesn’t seem to be a unified support for a rate hike among central bank policy makers. Boston Fed President Eric Rosengren, a voting member of the Fed’s policy committee this year, said the economy was still strong enough to justify a rate hike in the coming months while Atlanta Fed President Dennis Lockhart said the Fed should be patient before raising rates again. Lockhart isn’t a voting member of the Fed’s policy committee this year but is regarded a key moderate voice. After Yellen’s remarks the likelihood of an interest-rate hike in June stood at 4% compared with 21% before the Friday’s jobs data, according to the CME Group’s FedWatch tool. Today at 14:30 CET first quarter non-farm productivity and unit labor cost will be released. The tentative outlook is negative. And at 16:00 CET June Economic Optimism Index by Investors Business Daily will be published. The tentative outlook is positive. At 21:00 CET April consumer credit will be published. The tentative outlook is negative.
European stocks closed higher on Monday led by advances in mining stocks. The euro was little changed after Friday’s steep increase in the wake of disappointing US jobs report. The Stoxx Europe 600 index closed up 0.3%. Miners were the best performers with Anglo American (LON:AAL) rallying 11%, Rio Tinto PLC (LON:RIO) jumping 6.4% and BHP Billiton PLC (LON:BLT) rising 6.3%. German DAX 30 index rose 0.2% to 10121.08 despite an unexpected 2 % drop in manufacturing orders for April in Germany. France's CAC 40 edged up less than 0.1% and UK’s FTSE 100 gained 1%. Today at 11:00 CET first quarter final GDP will be published in euro-zone. The tentative outlook is neutral.
Asian stocks are advancing today as dollar weakness continued following Yellen’s Monday comments. China’s Shanghai Composite Index is up 0.08% and Hong Kong’s Hang Seng index is gaining 1.25%. Nikkei closed 0.6% higher rebounding from four week low today as yen weakness against the dollar persisted with investors anticipating more stimulus measures by the Bank of Japan next week.
Oil futures prices are steady today with market sentiment supported by reports of continued attacks on Nigerian oil pipelines by militants and resumption of operation at Total’s French refineries that were shut on strikes. August Brent crude closed 1.8% higher at $50.55 a barrel on London’s ICE Futures exchange yesterday.
Gold is edging lower today after closing higher on Monday as Federal Reserve chair Janet Yellen’s cautious remarks did little to indicate a rate hike at Fed’s policy meeting next week.