US stocks pulled back on Monday after a rally prompted by strong July jobs market report last Friday. The dollar strengthened as the surprisingly high number of new jobs added in July increased the likelihood of a rate hike this year. According to the live dollar index data the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, rose 0.34% to 96.333. The Dow Jones industrial average lost 0.1% settling at 18529.29, with the gains in Exxon Mobil and Chevron shares failing to offset losses in Merck and Pfizer, down 1.6% and 1.4% respectively. The S&P 500 slipped 0.1% to 2180.89 with the drop in health-care stocks outweighing gains in energy stocks as oil rose.

The Nasdaq composite fell 0.2% closing at 5213.14. The 255000 jobs US economy added in July was much higher than the 180000 expected increase in non-farm payrolls and the numbers of new jobs created in June and May were revised higher, alleviating concerns that US economic recovery has stalled. It should be noted that the current stock market rally is being driven mainly by accommodating monetary policies by major central banks which have increased global liquidity and driven interest rates lower, supporting stock markets globally. At the same time corporate earnings have not reversed the downtrend though reported declines are smaller than previously expected.

As of Friday, total earnings for the S&P 500 showed a decline of 2.3% year-over-year, better than the 5.2% fall expected at the beginning of the earnings season. Today at 14:30 CET July Small Business Optimism Index will be released by National Federation of Independent Business in US. The tentative outlook is neutral. At 14:30 CET preliminary second quarter non-farm productivity and unit labor costs will be published. And at 16:00 CET August International Business Daily economic optimism index and June Wholesale Inventories will be released. The tentative outlook is positive.

European stocks closed slightly higher on Monday as bank stocks rallied. The euro was little changed against the dollar while the Pound edged lower. The Stoxx Europe 600 closed up less than 0.1%. Shares of UK bank Barclays jumped 3.6% after a reported ratings upgrade by Exane BNP Paribas, Italian Banca Popolare Societa Cooperativa rallied 5.1% and Deutsche Bank gained 3.1%. Airbus shares fell 1.3% on news the UK’s top corruption investigator has opened a criminal investigation centered on allegations of fraud, bribery and corruption in the company’s civil-aviation business.

Germany’s DAX 30 index closed 0.6% higher to 10432.36 as German industrial output rose 0.8% in June, slightly more than expected. France’s CAC 40 gained 0.1% and UK’s FTSE 100 added 0.2%. Today at 10:30 CET June Manufacturing Production and Goods Trade Balance will be released in UK, the tentative outlook is positive for Pound. And at 16:00 CET National Institute of Economic and Social Research will publish change in GDP during the previous three months ending in July.

Asian stocks are edging higher today. Chinese headline inflation declined to 1.8% in July in line with expectations, reviving hopes for more stimulus. Shanghai Composite Index is 0.5% higher while Hong Kong’s Hang Seng index is 0.2% lower, and Australia’s All Ordinaries Index is up 0.2%. Nikkei ended 0.7% higher today at 16764.97 as yen weakened slightly.

Oil futures prices are retreating today after settling sharply higher on Monday. OPEC President Mohammed bin Saleh al-Sada, who is also Qatar’s energy minister, said in a written statement the cartel will hold an informal meeting in Algeria on September 26-28 to discuss means to help restore stability and order to the oil market. September West Texas Intermediate crude futures closed 2.9% higher at $43.02 a barrel on the New York Mercantile Exchange on Monday.



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