US markets rally with Nasdaq ending above 5000 - 3.3.2015

US markets rallied on Monday as investor optimism was boosted by a surprise rate cut by the People’s Bank of China and a series of mergers and acquisitions deals. NXP Semiconductor acquired Freescale Semiconductor for $11.8 billion, Hewlett-Packard bought Aruba Networks for $2.7 billion, and Cardinal Health acquired Cordis from Johnson & Johnson for $1.9 billion. The Nasdaq Composite ended above 5000, a level it had not reached since 2000. S&P 500 and Dow Jones Industrial Average also closed at new record highs. Markets shrugged off the economic data that came in lower-than-expected. As personal income rose 0.3% in January personal spending declined 0.2%, more than expected. This resulted in increase in savings rate 5.5% in January against 5% in previous month. If consumers keep spending less while their income rises this may negatively affect the GDP growth rate. Construction spending fell unexpectedly in January, which may be explained by bad weather. The weaker than expected manufacturing gauge from the Institute for Supply Management for February pointed to a slowdown in manufacturing activity. The next important economic report of the week will be the February employment report on Friday, where market participants’ focus will be on average hourly and aggregate earnings. The dollar traded higher against the euro, yen and pound, helped by the surprise rate cut from the People’s Bank of China. The ICE US Dollar Index rose 0.2% to 95.47. Today auto manufacturers will be reporting their sales figures in US.

European stocks ended lower on Monday giving up gains that followed the release of encouraging economic data earlier in the session. The 0.3% year-over-year decline in consumer prices in February was lower than expected. Euro-zone’s unemployment rate fell to 11.2% in January from 11.3% in December, its lowest since April 2012. The signs of positive developments in euro-zone’s economy point to the prospect of sizable equity gains when the ECB starts its quantitative easing program this month. Meanwhile the Stoxx Europe 600 slid 0.2% with energy shares leading declines after oil prices fell 3.9%. While most European indexes closed lower on Monday, Germany’s DAX 30 hit the 20th record closing high of 2015. Greece’s Athex Composite stock index fell 2.5% amid concerns about the country’s debtAt 11:00 CET euro-zone Producer Price Index for January will be published. The tentative outlook is negative.

Nikkei is falling today as investors took profits following recent record closings. Chip-related shares such as semiconductor-equipment makers outperformed after the Nasdaq closed above 5,000 on Monday, implying strong demand for the semiconductor industry. Exporters were mixed, with Toyota Motor Corp falling 0.6 percent and Honda Motor Co gaining 0.4 percent. Sharp Corp slumped 9.8 percent on news that it is planning to seek aid from its main lenders to prepare for restructuring as it expects losses to mount this year.

Australia's central bank held its interest rate steady today contrary to expectations of another rate cut.

Oil prices fell on concerns of increasing oversupply on the back of news of rising output from Libya. The spread between the West Texas Intermediate crude-oil futures and Brent crude narrowed to just under $10.

Gold prices retreated on Monday, ending a three-day winning streak as rising US stock markets and stronger dollar lured investors away from the safe haven asset.