The return of US investors from their President’s Day holiday inspired more risk-taking activity on Wall Street, allowing indices to end higher. The Dow 30 index closed 222.57 points up to 16,196.41 (+1.39%), the S&P 500 index ended 30.80 points up to 1,895.58 (+1.65%), and the Nasdaq landed 98.4 points up to 4,436.0 (+2.27%).
Data from the US economy actually came in below expectations, with the Empire State manufacturing index chalking up a smaller improvement than expected, and commodity prices turned lower after the Russia-OPEC meeting failed to produce a solid agreement to trim production levels. Instead, energy officials from Saudi Arabia and other oil-producing nations pledged to freeze production only if other countries agree to do so.
Energy and banking sector woes weigh on European markets
As in the previous week, energy and banking sector issues continued to drag European indices lower. The German DAX ended 71.73 points down to 9,135.11 (-0.78%) and the French CAC 40 closed 4.59 points down to 4,110.66 (-0.11%) while the Euro Stoxx 50 logged in a drop of 17.17 points to 2,816.70 (-0.61%).
In the United Kingdom, inflation reports came in mixed, as the headline CPI improved from 0.2% to 0.3% as expected while the core version of the report fell from 1.4% to 1.2%, worse than the projected drop to 1.3%. The London FTSE ended 37.89 points up to 5,862.17 (+0.68%) as this supported expectations that monetary policy could remain unchanged for much longer, allowing businesses and individuals to take advantage of cheap credit. UK jobs data is due today and another increase in claimants is eyed while the average earnings index might indicate weaker wage pressures.
Asian markets reel on risk-off vibes
Asian equities were off to a weak start today, with the Nikkei 225 down 376.44 points to 15,677.99 (-2.32%) and the S&P ASX 200 index down 27.94 points to 4,882.10 (-0.57%). The People’s Bank of China set their yuan reference rate much lower today, allowing the currency to appreciate against its rivals.
Traders are also likely paring their risky holdings ahead of the release of the FOMC minutes later today, as these could provide more hints on when the Fed might increase borrowing costs again. Based on the tone of recent testimonies from Fed officials, policymakers are concerned about falling commodity prices, dollar strength, and financial market volatility, possibly enough to convince them to sit on their hands until the next policy meeting.
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