OptionsClick | Nov 10, 2015 04:42AM ET
U.S. benchmarks moved lower on Monday as investors took a likely December interest rate hike into account. The release of the most recent nonfarm payrolls report has shown a dramatic uptick in the number of jobs added to the U.S. market, prompting concerns over increased borrowing costs and reduced finds in the hands of investors. The recent report has caused 70% of traders to bet on the Federal Reserve raising interest rates, according to CME Group’s polling. Additionally, recently released Chinese economic data weighed down on shares as imports and exports in the world’s second largest economy have fallen 19% and 7% on a yearly basis. Shares were up to soft start as the previous session’s losses were extended. The Dow Jones Industrial Average fell 179.85 points, or 1%, to trade at 17,730.48. The S&P 500 shed 20.62 points, or nearly 1%, to trade at 2,078.58 and the Nasdaq Composite declined 51.82 points, or 1.01% to trade at 5,095.30. Shares pared some earlier losses towards the end of the trading session, though these were attributed to bargain hunting during the afternoon. The S&P’s consumer discretionary and energy sectors both led declines with around 1% in losses.
The prospect of an interest rate hike has strengthened the dollar, causing some analysts to claim that parity between the greenback and the euro may be in sight. However, these claims were made numerous times and failed to materialize. The EUR/USD moved nearly 2.5% lower after the release of the U.S. nonfarm payrolls report, bringing the pair to $1.0733. The European Central Bank’s current easing programs, which have moved helped the Eurozone move away from deflation, are also weighing down on the shares currency. With talks to expand the current 1 billion euro stimulus program, the euro will likely continue to move lower against the dollar, especially as all signs point towards a move to tighter U.S. monetary policy.
The dollar’s strength pressured down on commodities. Gold is trading near a three-month low at $1,092.2 an ounce and silver fell to a one-month low of $14.48 an ounce. Copper moved to a six-week low at $4,940 a ton, as the highly sought industrial metal suffers due to soft Chinese data that could imply reduced demand. Crude oil declined for a fourth consecutive day as news broke that U.S. supplies have increased.
This week’s economic data releases continue today with the release of Chinese inflation numbers, followed by Chinese production and UK employment data on Wednesday. The week will conclude with Friday’s GDP data from the Eurozone as well as U.S. retails sales data.
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