Markets lower after mixed session as lockdown easing continues - 12.5.2020

The Dollar strengthening has stalled today ahead of the start of purchasing of corporate bond exchange-traded funds by the Federal Reserve's new lending program today. 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, jumped 0.5% Monday. Both EUR/USD and GBP/USD reversed climbing Monday as Italy reported its industrial production fell 28.4% in March after 1% decline in prior month, when a 20% drop was expected. Euro is higher currently against the dollar while Pound lower still. USD/JPY joined AUD/USD’s continuing slide today.

Futures on three main US stock indexes are edging lower currently after ending mixed Monday despite reports auto factories in Michigan reopened amid concerns new wave of cases may emerge as a growing number of states are easing lockdown restrictions. 3M, Hershey and Toyota Motor are among companies reporting quarterly results today. Stock indexes in US ended mixed on Monday: the three main US stock indexes posted returns ranging from -0.4% to +0.8% led by technology shares. Quarterly results so far point to about 13.6% fall from a year ago in aggregate earnings, the worst performance since the third quarter of 2009, according to FactSet.European stock indexes are falling mostly currently after extending losses Monday with Italy’s bigger than expected drop in industrial output in March highlighting the hefty toll of lockdown measures on euro-zone economy. Asian indexes are mostly lower today as China reported its producer price index fell 3.1% over year in April, compared with a 1.5% fall in March. Hong Kong’s Hang Seng Index is down 1.8%.

Brent is extending losses today. Oil prices declined on Monday despite news Saudi Arabia’s energy ministry directed Saudi Aramco to reduce its crude oil production by an extra voluntary 1 million barrels per day beginning in June. Kuwait and United Arab Emirates also reported voluntary cuts to their crude output by 80,000 and 100,00 barrels per day respectively in June. Organization of the Petroleum Exporting Countries and other major producers have commenced cuts equating to 9.7 million a barrel a day, about 13% of global production, on May 1 through June. The US oil benchmark West Texas Intermediate (WTI) futures fell Monday: June WTI lost 2.4% but is rising currently. July Brent crude dropped 4.3% to $29.63 a barrel.