By IFCMarkets
US stocks rallied on Monday after selling off last week. S&P 500 advanced 1.4%, the biggest percentage gain since February 3. Stocks rose as the dollar weakened and lower than expected manufacturing data eased concerns over Fed’s imminent interest rate hike. The Empire State manufacturing index declined in March, but still indicates improving conditions with solid gains in the employment index. Industrial production, which includes mines and power plants, rose a seasonally adjusted 0.1% in February, less than expected. Factory production fell 0.2%, declining for a third consecutive month, as West Coast port delays caused supply shortages and stronger dollar dented demand for US goods. The ICE dollar index, a measure of the US currency against a basket of six major rivals, fell to 99.70, declining from 100.19 it reached on Friday. The Federal Reserve’s two-day meeting begins today. A strong job report earlier this month fueled expectations that the Fed could raise the interest rates in June. Market participants expect that the Fed will drop the word “patient “ from its statement, signaling that it is considering raising interest rates in June. At 13:30 CET February Building Permits and Housing Starts will be released in US. The tentative outlook is positive for the dollar.
European stocks rose on Monday. The Stoxx Europe 600 gained 0.9% and closed above the 400 mark for the first time since June 2007. European equity markets are being boosted by the 60 billion euros ($63.25 billion) a month asset purchase program of the European Central Bank. As the ECB purchases of the government bonds push the bond yields lower, part of the liquidity that the ECB is pumping into the economy ends up in equity markets. At the same time the depreciating euro makes the output of European exporters cheaper for overseas importers, which additionally boosts the shares of European export-oriented companies. The euro pulled back from a 12-year low versus the dollar on Monday, but it will remain under pressure as the Federal Reserve and the European Central Bank move in opposite directions on monetary policy. Today at 11:00 CET March ZEW survey results for Germany and euro-zone will come out. The tentative outlook is positive for euro.Nikkei is rising today following the gains on Wall Street and European stock markets. The Bank of Japan refrained from expanding its massive stimulus program that involves printing money at an annual pace of 80 trillion yen ($659 billion). It stated that the lower oil prices have contributed to continued disinflation and consumer inflation is moving around zero percent for the time being, but the economy is expected to continue recovering moderately as a trend.West Texas Intermediate crude oil prices fell to six year low on Monday as investor concerns about supply and demand imbalance took central stage. Prices fell despite a monthly market report by the Organization of the Petroleum Exporting Countries that forecast a drop in US output by the end of the year. US oil production continues to grow despite Nymex oil futures declined by more than half from the mid-2014 peak above $107 a barrel.Gold prices inched higher on Monday for a third session in a row, as the US dollar weakness supported the safe haven asset demand.After a 13% drop in prices for February coffee prices jumped 6.4% on Monday.
Market Analysis provided by IFCMarkets