Dollar stronger and US stocks rise on positive data - 18.8.2015

US stocks advanced on Monday after data showed US homebuilder confidence rose in August to its highest level in nearly a decade. The dollar inched higher as the Chinese yuan stabilized, with the ICE US dollar index, a measure of the dollar’s strength against a basket of six currencies, gaining 0.3%. The S&P 500 closed higher 0.5%, with health-care and consumer discretionary stocks leading the gains as nine out of ten sectors closed higher. Stocks recovered from heavy losses after report the manufacturing activity index in the New York state unexpectedly fell in August. Biotech stocks were among the best performing on the S&P 500. Based on the results of corporate reports of 92% of the S&P 500 companies so far, second-quarter earnings are expected to have edged up 1.2%, while revenue is expected to have fallen 3.5%. About 5.4 billion shares were traded on US exchanges, nearly 21% lower than monthly average to date. Today at 13:30 CET July housing starts and building permits will released in US, the tentative outlook is negative.

European stocks ended choppy trading session mostly higher on Monday. The Stoxx Europe 600 index rose 0.3%, Germany’s DAX 30 index fell 0.4% and France’s CAC 40 index rose 0.6%. The euro weakened against the dollar. Greece’s Athex Composite Index rose 1% as investor confidence was bolstered by news that the Eurogroup of euro-zone finance ministers on Friday approved 86 billion euros ($95.22 billion) in third bailout loan for Greece, averting its bankruptcy. The first installment of money is expected to be made by August 20, when Athens must repay 3.2 billion euros to the European Central Bank. European stocks have been rising on the backdrop of one of the best in five years earnings season as European Central Bank monetary easing lifted the region's stock markets in the face of worries over China and Greece's debt problems. No important economic data are expected today in euro-zone. According to data released in UK today in the morning inflation edged up 0.1% in July, accelerating from 0% in June and beating market expectations of no inflation.

Nikkei fell 0.3% today as yen strengthened against the dollar. Investor confidence was undermined by slowdown in China and falling Asian equity markets.

Chinese shares tumbled today the most in three weeks as investors anticipated government will scale back efforts to support equities after data Tuesday showed a stronger housing market and the central bank injected 120 billion yuan ($18.77 billion) worth of cash into the financial system, making it less likely the regulator will lower lenders’ reserve requirements.

Oil prices are falling today after West Texas Intermediate hit a six-year low yesterday on concerns that the crude oil oversupply will exacerbate. Data from Baker Huges oil services company showed US oil rig count grew by two in the latest week to 672, marking the fourth consecutive week of increases. At the same time oil refineries are expected to cut their oil consumption due to a seasonal decline in refinery runs over the next two months.

Gold prices are rising today after closing higher on Monday. China’s devaluation of yuan sparked expectations that Fed’s interest rate hike may be delayed, providing support to gold. Traders will be watching closely the consumer price index data and minutes from the Federal Reserve’s July policy meeting to be released tomorrow to gauge the likelihood of interest rate hike later this year.