By IFCMarkets
Dow Jones Industrial Average rose by 0.16%, S&P 500 slightly decreased by 0.06%, and Nasdaq Composite fell by 0.61%. The main negative factor was the announcement by the US Commerce Secretary Wilbur Ross about a possible trade war with China.
He made it at the World Economic Forum in Davos, noting that the US authorities are considering countermeasures against China’s violation of intellectual property rights. At the beginning of trading, the US stocks advanced, but after the US Commerce Secretary’s announcement, the quotes began to decline. Previously, US President Donald Trump had approved high duties on imported washing machines and solar panels. US Treasury Secretary Steven Mnuchin positively assessed the weakening of the US currency for the economy. Yesterday’s data on existing home sales for December were weak. All this affected the dollar exchange rate in the most negative way and it continued to decline. In turn, S&P 500 was supported by the positive quarterly earnings reports by Abbott Laboratories and the growth of its stocks by 4.2%. The decline in Nasdaq was contributed by the weak quarterly earnings by Texas Instruments. This company reported the slowest revenue growth for 4 quarters and its stocks fell by almost 9%. Today at 14-30 CET, trade balance and wholesale inventories for December, and at 16-00 CET, leading indicators and pending home sales will be released in the US.
Today at 13-45 CET, the next ECB meeting will take place.
Amid the weakening of the dollar, the euro strengthened strongly. This caused a decline in the European stock indices on Wednesday, as investors believe that the euro strengthening will obstruct the exports. Today’s main event will be the ECB meeting. No rate changes are expected, but market participants believe that some announcements will be made about the future monetary policy tightening. In this case, the euro will continue to strengthen. On the other hand, some investors expect a correction of the euro, if the ECB President Mario Draghi declares that a high euro exchange rate is dangerous for the EU economy. In general, there is no unanimous opinion on the dynamics of the foreign exchange market after the ECB meeting. Today, several large European companies, such as Aryzta, Software AG, STMicroelectronics, Nordea, Clariant, published negative corporate information, which contributes to the further decrease of stock prices.
The strengthening of the yen for the 3rd day in a row had the main negative impact. Market participants fear that it will greatly reduce the competitiveness of Japanese exporters. Their stocks fell: Honda Motor (-1.3%), Subaru Corp (-1.5%), Panasonic Corp (-2.2%), Advantest Corp (-2.5%). In turn, the stocks of commodity companies advanced and, as a result, Nikkei decline was very moderate.
Despite the API report about the unexpected growth of the US oil reserves on Tuesday, the official data recorded a decline in the US reserves for the 10th consecutive week. This was reported on Wednesday by the U.S. Energy Information Administration. An additional factor in the growth of oil quotes was the continual weakening of the US dollar.
Contrary to the attempts of the soybean prices to correct, they are rising for the 9th day in a row. This is the longest continuous increase in the last 6 years. The main reason for the growth is the drought in Argentina and the weakening of the US dollar. The prices of wheat, corn and oats also increased.
Free Reports:
Market Analysis provided by IFCMarkets
Note:
This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.