Trump rally still alive - 14.2.2017

US stocks hit record highs three sessions in a row

US stock indices ended at record highs on Monday for third session in a row. The dollar strengthened supported by the boost from President Trump’s announcement of impending tax reforms last week. 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 0.25% higher at 100.999. The Dow Jones average rose 0.7% to a record high 20412.16, led by Caterpillar and Goldman Sachs shares. S&P 500 gained 0.5% settling at a record 2328.25, led by financials and industrial stocks up 1.1% and 1% respectively. The Nasdaq composite index closed 0.5% higher at a record 5763.96.

Stocks are rising with investor confidence boosted by corporate reports pointing to end of earnings recession and optimism over US economy prospects on expectations of tax cuts and deregulation advocated by President Trump during his campaign. Investors were relieved also by lack of surprises at the meeting between Trump and Canadian Prime Minister Justin Trudeau. Today investors will be watching closely Federal Reserve Chair Janet Yellen’s testimony before the Senate Banking Committee about monetary policy and the Fed’s view on the US economy. Treasury yields rose yesterday ahead of Yellen’s comments. With employment and inflation nearing the Fed’s targets, the Fed is widely expected to implement three interest rate hikes in 2017 and Yellen’s testimony will be closely watched to gauge the likelihood of a March hike. Today at 12:00 CET National Federation of Independent Business’s small business optimism index will be published, the outlook is positive for dollar. At 14:30 CET Producer Price Index for January will be released, the outlook is neutral. At 16:00 CET Fed Chair Janet Yellen will testify on monetary policy before the Senate Banking Committee, in Washington DC. And at 19:00 CET Federal Reserve Bank of Dallas president Robert Kaplan will speak in Houston, Texas

DJI

European stocks rise as concerns about Trump’s protectionist stance subside

European markets rallied on Monday with market sentiment boosted by President Trump’s softer foreign-policy stance at recent meetings with prime ministers of Japan and Canada. The euro weakened against the dollar after a failure to reach an agreement in bailout negotiations between Greece’s finance minister and international creditors on Friday. The British Pound strengthened against the dollar ahead of inflation report due today. The Stoxx Europe 600 index rose 0.8% to highest level since 2015. The DAX 30 added 0.9% to close at 11774.43. France’s CAC 40 outperformed gaining 1.2% and UK’s FTSE 100 ended 0.2% higher at 7278.92.

The European Commission’s upgraded outlook for the EU growth prospect also provided an additional boost to market sentiment. The European Commission, which is the EU’s executive arm, upgraded its 2017 growth forecasts for the EU to 1.8% from 1.6% forecast in November. It forecast all 28 member states will grow at the same time for the first time in nearly 10 years. Fourth quarter German GDP rose 0.4% on quarter following a 0.2% growth the previous quarter,as reported by German statistics department Destatis today. The reading was below of the expected 0.5% gain. At 10:30 CET January inflation will be reported in UK, the outlook is positive for British Pound. At 11:00 CET preliminary euro-zone GDP and ZEW survey results for Germany and euro-zone for February will be released, the outlook is positive for euro.

Asian stocks mixed ahead of Yellen’s testimony

Asian stock indexes are mixed today as investors await Yellen’s testimony on monetary policy before the US Congress later today. Nikkei lost 1.1% to 19238.98 as yen strengthened against the dollar and concerns grew Toshiba is in a deeper trouble with its US nuclear subsidiary after the company announced it would delay its earnings release. Chinese stocks are edging higher after positive reports showing consumer and producer prices rose in January in China, alleviating concerns about deflation across the globe. The Shanghai Composite Index is up 0.05% while Hong Kong’s Hang Seng Index are 0.01% lower. Australia’s All Ordinaries Index is 0.03% lower with the Australian dollar edging higher against the dollar on better than expected business confidence sentiment as reported by the National Australia Bank monthly business survey

Oil prices edge higher

Oil futures prices are recovering today after recording the biggest one-day decline in four weeks on Monday. Investors are concerned US crude oil output increases may outweigh output cuts by major producers even as OPEC reported compliance rate of around 90% with the agreed cuts of almost 1.8 million barrels per day (bpd) during the first half of 2017. However as US active oil rig count rises shale oil producers have lifted overall output to 8.98 million bpd, up 6.5% since mid-2016. April Brent crude declined 2% to $55.59 a barrel on London’s ICE Futures exchange on Monday.