US markets retreat as dollar rebounds - 8.4.2015

US stocks inched lower on Tuesday after morning session gains. Merger deal news supported market sentiment in morning trading. Shares of FedEx rose 2.7 percent as it announced it would buy Dutch package delivery company TNT Express for $4.8 billion. Informatica Corp. finished up 4.3% as it agreed to be taken private by Permira Advisors LLC and the Canada Pension Plan Investment Board in a $5.3 billion deal. The market sentiment shifted after the dollar recovered from recent losses in afternoon trading, which spurred investor concerns about the impact of stronger dollar on corporate earnings. The ICE US Dollar Index , a measure of the dollar’s strength against a basket of six major currencies, rose 1.2% to 97.9400. The S&P 500 slipped 0.2%. Today Alcoa Inc will provide the unofficial start of first-quarter earnings season with its report after the close. At 12:00 CET Mortgage Applications for the week ended April 3 will be released in US. And at 13:30 Fed's Powell speaks on monetary policy in New York, an hour later at 14:30 CET FOMC member Dudley will speak on economy and monetary policy in New York. At 19:00 CET FOMC March meeting minutes will be published.

European stocks rallied on Tuesday as market sentiment was bolstered by easing of concerns about interest rate hike in US, merger-and-acquisition news and further indications of improvement in euro-zone economy. The Stoxx Europe 600 climbed 1.6% to 404.34, just below its best closing level of 405.50. Vivendi SA shares climbed 1.2% on its offer to buy French telecom Orange's video-sharing website Dailymotion. Markit’s Tuesday report showed that activity in the manufacturing and services sectors in euro-zone expanded by the fastest pace in 11 months. The euro fell to its lowest level in six days on Tuesday. The recovery of euro-zone economy is gaining momentum as weaker euro due to monetary easing by the European Central Bank has boosted overseas earnings of European exporters and lower oil prices boosted spending power in households. Today at 10:00 CET February Retail Sales will be released in euro-zone. The tentative outlook is negative for the euro. Tomorrow in the morning at 7:00 CET February Industrial Production and Trade Balance for Germany will be released by Eurostat. The tentative outlook is positive.

Nikkei hit 15-year high today as retail investors acquired sizable stakes in two new stock mutual funds launched this week. Nikkei has gained 3.0 percent so far this month, helped by 160 billion yen ($1.3 billion) investment in two new stock mutual funds. The Bank of Japan refrained from taking any additional easing measures, but market participants expect eventually new stimulus measures will be forthcoming as the official target of 2 percent inflation in two years has not been achieved.

Oil prices rose for a second straight session on Tuesday on expectations of second weekly decline in US production. Last week data showed US oil rig-count declined and production fell by 36,000 barrels a day for the first time since mid-January. The global oversupply is still an issue, and analysts at Goldman Sachs estimate declining oil rig- count will likely not be sufficient to balance the market in 2016. Today at 15:30 CET Crude Oil Inventories will be released by Energy Information Administration.