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Markets brush off economic reports - 2.12.2015

US stocks advanced on Tuesday as investors brushed off mixed US economic data. The S&P 500 gained 1.07% and the Nasdaq Composite rose 0.9%. The dollar weakened after weak US manufacturing data and upbeat European economic data. Live dollar index data showed ICE US Dollar index, a measure of the dollar’s strength against a basket of six currencies, edged down 0.33%. The Institute for Supply Management report indicated US manufacturing sector contracted to its weakest level since 2009 with the manufacturing index falling to 48.6% from 50.1% in October. Readings less than 50 indicate contraction. At the same time the 1% seasonally adjusted rise in construction spending in October was higher than expected, and car sales posted modest monthly gains. Investors are optimistic about the November jobs report on Friday which is expected to provide clues about the timing of the interest rate hike. Today at 13:00 CET mortgage applications will be released in US. At 14:10 CET Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on economy in Florida. At 14:15 CET ADP Employment Change will be published. The tentative outlook is positive. At 14:30 CET revised third quarter Unit Labor Cost Index and Nonfarm Productivity will be released. At 18:00 CET Federal Reserve Chair Janet Yellen speaks before the Economic Club of Washington. At 20:00 CET Federal Reserve releases the Beige Book. And at 21:40 CET Federal Reserve Bank of San Francisco President John Williams speaks on the economic outlook in Portland, Oregon.

European shares ended lower on Tuesday despite positive economic data. The euro strengthened on upbeat economic data, closing up 0.6% at $1.0624. Pan-European FTSEurofirst 300 index slipped 0.3%, Germany’s Dax 30 index fell 1.1%. Economic data indicated the manufacturing sector in euro-zone expanded in November with the final reading of Manufacturing PMI of 52.8 in line with expectations. The 14% slump in Linde’s shares, which resulted after the world’s biggest producer of industrial gases cut its 2017 operating profit forecast, weighed on benchmark indexes. Analysts point that the continued rise in stock market indexes when major manufacturers are scaling back earning forecasts is a sign the rally is driven by expectations of more stimulus from the European Central Bank. The ECB is widely expected to expand the stimulus program and cut the deposit rate on Thursday. Today at 11:00 CET November inflation data will be released in euro-zone. The tentative outlook is positive.

Nikkei fell 0.4% today as investors were cautious about making big bets ahead of major events such as the ECB policy meeting and the release of nonfarm payrolls report in US. Tomorrow at 2:35 CET November Services and Composite PMIs will be released in Japan. And at 07:30 CET Bank of Japan Board member Takahide Kiuchi will speak in Tokyo.

Asian markets are rising today with Shanghai Composite Index up 2.28%.

Today at 16:00 CET Bank of Canada will release its Rate Decision. The central bank is expected to leave the interest rate unchanged at 0.5%.

Oil futures quotes are falling today on concerns US inventories rose more than expected on the backdrop of current global glut. Today at 16:30 CET US Crude Oil Inventories will be released by the Energy Information Administration. The industry group American Petroleum Institute estimates the US crude inventories likely rose 1.6 million barrels in the week, more than the 1.2 million barrel increase forecast by the pricing agency Platts.

Copper slid 0.9% today after US manufacturing contracted unexpectedly in November. The fall reversed the 1% gain on Tuesday as Chinese companies announced about planned production cuts of 350,000 metric tons next year.

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