Daily Stocks Update: US Equities Pare Gains Before GDP, Yellen

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Investors are trimming their stock holdings ahead of today’s top-tier events in the US economy and the long weekend. The US preliminary GDP reading is up for release and analysts are expecting to see an upward revision from 0.5% to 0.8%. However, any positive results could be overshadowed by FOMC head Janet Yellen’s testimony, which might set the tone for market expectations for a June rate hike.

Last week and earlier this week, FOMC members have been emphasizing that the June meeting will be a live one, as their decision to hike or stand pat would be data-dependent. So far, data from the US economy has been mostly stronger than expected but equity price action action ultimately hinge on Fed Chairperson Yellen’s outlook.

The Dow 30 index fell 23.22 points to 17,828.29 (-0.13%), the S&P 500 index dropped by 0.44 points to 2,090.10 (-0.02%) but the Nasdaq advanced 6.88 points to 4,901.77 (+0.14%). The S&P 500 VIX fell 0.47 points to 13.43 (-3.38%) to indicate that risk appetite is still present.

European markets chalk up small gains despite weak UK data

The UK second GDP estimate was unchanged at 0.4% but other major reports indicated weakness. In particular, the preliminary business investment figure showed a 0.5% decline instead of the estimated 3.2% gain while BBA mortgage approvals suggested declining demand in the housing market, presumably a result of pre-Brexit referendum jitters.

Even so, the London FTSE rose 2.80 points to 6,265.65 (+0.04%). The German DAX rose 67.50 points to 10,272.71 (+0.66%), the French CAC 40 advanced 31.00 points to 4,512.64 (+0.69%), and the Euro Stoxx 50 index rose 9.81 points to 3,071.41 (+0.32%).

Chinese markets down, rest of Asia in the green

Asian markets are looking mixed so far, as Chinese equities are retreating while other stock indices in the region are showing gains. The China A50 index is down 20.25 points to 9,333.69 (-0.22%), the Hang Seng index is down 51.11 points to 20,346.00 (-0.25%), and the DJ Shanghai index is down 1.06 points to 383.46 (-0.28%). Meanwhile, the Nikkei is up 76.52 points to 16,849.66 (+0.46%) and the S&P ASX 200 is up 30.31 points to 5,418.10 (+0.56%).

In Japan, the national core CPI showed a 0.3% decline versus the projected 0.4% drop in price levels while the Tokyo core CPI printed a sharper than expected 0.5% decline. Commodities have retreated in the past few hours after crude oil found sellers at the $50/barrel levels.

 

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.