Global equities rally continues - 22.2.2017

Dow records eighth straight gain

US stock markets recorded hefty gains on Tuesday with all three main indices ending at new all-time highs. The dollar strengthened: 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, closed up 0.5% at 101.461. The S&P 500 gained 0.6% settling at 2365.12 led by real estate and consumer staples stocks with all eleven of the S&P 500′s primary sectors ending higher. The Dow Jones industrial rose 0.6% to close at 20737.83 led by Wal-Mart and UnitedHealth shares. The blue chip index rose for an eighth straight session. The Nasdaq index closed up 0.5% at record high of 5865.95.

The rally that started since November election on expectations of pro-growth policies proclaimed by Donald Trump was boosted recently by Trump’s promise to unveil a "phenomenal" plan for corporate taxes very soon. The dollar recent uptrend continued supported by hawkish comment of Philadelphia Fed President Patrick Harker last Friday that he “would not take March off the table at this point” if he sees additional evidence that US inflation is gaining momentum. While more investors have started considering the possibility of a March rate hike after recent run of positive inflation and labor market data and Fed chair Yellen’s hawkish congressional testimony, Fed funds futures indicate a less than 20% chance of a March hike, according to the CME Group’s FedWatch tool. And Markit reported Manufacturing and Services PMIs declined in February while an increase was expected. Investors will be focusing today on minutes from the latest FOMC which may help predict whether the Federal Reserve will take action at its coming meeting in March. Today at 13:00 CET Mortgage applications will be released by the Mortgage Bankers’ Association in US. At 16:00 CET January existing home sales will come out, a higher figure compared with the previous month is expected. At 19:00 CET Fed's Powell speaks on economic outlook in New York. And at 19:00 CET Federal Open Market Committee meeting minutes will be released.

European shares rise on upbeat manufacturing data

European stocks advanced on Tuesday with market sentiment buoyed by upbeat euro-zone data. However, the euro weakened against the dollar on heightened political uncertainty while the British Pound edged higher against the greenback. The Stoxx Europe 600 rose 0.6%. Germany’s DAX 30 outperformed rising 1.2% to 11967.49 helped by gains in exporter stocks benefitting from weaker euro. France’s CAC 40 added 0.5% while UK’s FTSE 100 index fell 0.3% to 7274.83 weighed by 6.5% plunge in shares of HSBC after the bank reported a fourth-quarter net loss of $4.23 billion, much bigger than the $1.33 billion loss a year.

Investors’ risk appetite was boosted by Markit’s better than expected preliminary reading on manufacturing activity in the euro-zone: euro-zone Manufacturing PMI for February came in at 56.0 instead of expected 54.3. The euro slide continued after polls released Monday showed far-right candidate Marine Le Pen gained on her two main rivals. Marine Le Pen has called for France to leave the European Union and the euro. Today at 10:00 CET German Ifo Business Climate survey results will be released, the tentative outlook is negative for euro. At 10:30 CET 4Q UK preliminary GDP will be published, the outlook is neutral for British Pound. At 11:00 CET euro-zone January consumer price index will be released, the tentative outlook is negative for euro.

DJI

Asian stocks mixed

Asian stocks are mixed today as investors await the minutes from Fed’s February policy meeting for clues about the likelihood of a March rate hike. Nikkei ended 0.01% lower at 19379.87 today on stronger yen. Bank of Japan Governor Haruhiko Kuroda said today that pushing rates further into negative territory from current minus 0.1% was off the table, mentioning improved inflation outlook as Japan’s growth accelerates. The Shanghai Composite Index is down 0.2% as data showed China's home price growth slowed for the fourth straight month with demand cooling further in its biggest cities while Hong Kong’s Hang Seng Index is 0.9% higher rebounding from previous day’s pullback. Australia’s All Ordinaries Index is up 0.25% despite stronger Australian dollar.

Oil prices steady

Oil futures prices are steady today after OPEC signaled optimism over its deal with other major producers to curb output about 2% globally, or 1.8 million barrels daily. At the same time OPEC’s Secretary-General Mohammad Barkindo played down talk of a six-month extension to that global production agreement at a conference in London. April Brent crude closed 0.9% higher at $56.66 a barrel on Tuesday on London’s ICE Futures exchange.