US stocks retreat as trading resumes after Labor Day - 6.9.2017

Fed officials cautious on rate hikes

US stock index futures fell on Tuesday as investors reacted to North Korea’s nuclear test Sunday. Trading was thin as traders returned from Labor Day holiday. The dollar weakened: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.3% to 92.292. The S&P 500 lost 0.8% settling at 2457.85, with eight out of 11 main sectors closing lower. Dow Jones industrial average fell 1.1% closing at 21753.31. The Nasdaq composite index dropped 0.9% to 6375.57.

Stocks are trading at historically high valuations with investors concerned about President Trump’s ability to deliver on his tax reform and deregulation promises. Comments by Federal Reserve officials indicated policy makers are concerned about sluggish inflation while the cental bank is planning further tightening. Fed Govermor Lael Brainard said the Fed may have to slow down its pace of interest-rate hikes, citing the recent low readings for inflation. She indicated that the central bank may continue its current expected pace, for one additional hike in 2017 and three in 2018 if low inflation “proves transitory”. Minneapolis Fed President Neel Kashkari said it is very possible that the central bank’s four interest-rate hikes since late 2015 could now be doing “real harm” to the economy. In economic news, factory orders slumped 3.3% in July after strong growth in the previous month on the back of Boeing aircraft orders.

European markets continue slide

European stock indices closed lower on Tuesday in choppy risk off trade after North Korea nuclear bomb test Sunday. Both the euro and British Pound ended higher against the dollar. The Stoxx Europe 600 fell 0.1%. Germany’s DAX 30 managed to end 0.2% higher closing at 12123.71. France’s CAC 40 lost 0.3% and UK’s FTSE 100 fell 0.5% to 7372.92. Markets opened 0.5%-0.7% higher today.

GB 100

Asian markets dip

Asian stock indices are lower today tracking Wall Street moves overnight. Nikkei slipped 0.1% to 19357.97 with stronger yen against the dollar hurting exporter stocks. Chinese stocks are lower: the Shanghai Composite Index is 0.02% down and Hong Kong’s Hang Seng Index is 0.5% lower. Australia’s All Ordinaries Index is down 0.3% despite the weaker Australian dollar against the greenback.

Oil higher as Hurricane Irma approaches US

Oil futures prices are extending gains today. Prices rose Tuesday as refineries impacted by Hurricane Harvey restarted and ramped up operations. Traders are following the Hurricane Irma which is headed towards Caribbean islands and the US. November Brent crude rose 1% to $53.38 a barrel on London’s ICE Futures exchange on Tuesday .