Markets retreat as Greek debt concerns undermined investor confidence - 12.5.2015

US stocks fell on Monday after rallying on Friday following the positive jobs report. The jobs report indicated the US economic growth is recovering after a slowdown in the first quarter, making the increase in interest rates in September likely. The prospect of an interest rate hike combined with high valuations of stocks makes investors anxious to cash in recent gains. Investors were concerned also about lack of progress in Greek debt negotiations and slowing growth in China. The S&P 500 closed 0.5% lower. All 10 main sectors finished in the red zone, with the energy sector leading the losses as it fell 2 percent. The trading was thin with 5.6 billion shares changing hands on US exchanges, about 18 percent lower than the daily average for the last five sessions. The dollar strengthened on Monday with the ICE US dollar index advancing 0.2% to close at 94.9850. Today at 14:00 CET the National Federation of Independent Businesses April Small Business Index will be released in US. The tentative outlook is positive for the dollar. At 15:00 CET the March Job Openings and Labor Turnover Summary will be released by the Labor Department. The tentative outlook is positive. At 17:45 CET Federal Open Market Committee member Williams will speak at Association for Business Economics in New York. And at 19:30 CET April Budget Statement will be published. The tentative outlook is positive.

European stocks ended mixed on Monday as the uncertainty surrounding the Greek debt negotiations weighed on markets. The mining stocks closed higher helped by the news of a rate cut in China, the world’s biggest metals consumer. Major stock indexes closed lower despite reports that Greece paid about 750 million euros ($836.8 million) to the International Monetary Fund a day before it was due on Tuesday. Greece is still in talks with creditors about unlocking the bailout funds. A senior IMF official said the IMF is working with national authorities in southeastern Europe on contingency plans for a Greek default. Today at 8:00 CET European Union's Economic and Financial Affairs Council meets in Brussels. Tomorrow at 6:30 CET first quarter preliminary GDP will be released in France. The tentative outlook is positive for euro. At 7:00 CET final Consumer Price Index for April and first quarter preliminary GDP will be released in Germany. The tentative outlook is negative. Today at 9:30 CET March Industrial and Manufacturing productions will be released in UK. The tentative outlook is neutral. At 15:00 CET the February GDP estimate will be published.

Nikkei ended flat today as optimistic earnings reports bolstered market sentiment and speculation that the Bank of Japan would buy exchange-traded funds helped pare morning session losses. Tomorrow at 0:50 CET and 1:00 CET March Trade Balance, April Bank Lending and Economy Watchers Sentiment will be released in Japan. The tentative outlook is positive.

Oil prices settled lower on Monday with the rate cut in China providing support for the commodity. China became the world’s biggest oil importer as customs data showed its crude-oil imports of record 7.4 million barrels-a-day in April exceeded US imports of 7.2 million barrels-a-day.

Copper prices fell the most in over two weeks amid concerns that a quarter percentage point rate cut will not be enough to boost the demand in China, the world’s biggest metals user.