By IFCMarkets
S&P 500 logs worst monthly drop in two years
US stock indices dropped further on Wednesday as selloff continued following Federal Reserve Chairman Jerome Powell’s upbeat assessment of US economy. The dollar strengthening persisted as Powell’s comments boosted expectations of more aggressive Fed tightening: 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, rose 0.3% to 90.65. The S&P 500 lost 1.1% to 27031.83, posting 3.9% monthly drop. The Dow Jones industrial fell 1.5% to 25029.20, down 4.3% on month. Nasdaq composite index slid 0.8% to 7273.01. Futures on main US stock indices indicate higher openings today.
The losses were broad, with all 11 main S&P 500 sectors ending the month in negative territory. Powell’s Tuesday comment the US economic outlook has improved since December revived fears the Fed may raise interest rates four times in 2018 instead of three as widely believed. In economic news the pace of growth in the US economy was revised to 2.5% from 2.6% in the fourth quarter due to a slower inventories buildup. The lower reading on GDP was in line with expectations. Separately, the Chicago PMI came in at below expectations 61.9 in February, a six-month low. Powell testifies today before the Senate Banking Committee at 17:00 CET.
European stocks slide
European stocks extended losses on Wednesday tracking Wall Street. The euro and the British Pound continued the slide against the dollar. The Stoxx Europe 600 lost 0.7%, closing 4% lower for February. Germany’s DAX 30 slipped 0.4% settling at 12435.85. France’s CAC 40 lost 0.4% and UK’s FTSE 100 fell 0.7% to 7231.91. Indices opened 0.3%-0.4% lower today.
French stock index ended lower despite an upgrade in France’s gross domestic product: GDP rose 2% in 2017 from 2016, instead of 1.9% stated previously, according to French statistics agency Insee. However French consumer spending dropped 1.9% on month in January. In other data GfK consumer confidence index slipped to 10.8 in February from 11.0 and euro-zone headline inflation declined to 1.2% in February from 1.3%, in line with expectations.
Asian markets mixed
Asian stock indices are mixed today after Wednesday’s selloff. Nikkei ended 1.6% lower at 21720 despite yen turning lower against the dollar. China’s stocks are higher after Caixin Manufacturing PMI private gauge suggested greater strength in factory activity than official data released Wednesday: the Shanghai Composite Index is 0.4% higher and Hong Kong’s Hang Seng Index is up 0.7%. Australia’s All Ordinaries Index is down 0.7% despite declining Australian dollar against the greenback after weak capital spending data.
Brent recovers after sharp drop as US supplies rise
Brent futures prices are recovering today with gains limited by stronger dollar. Prices dropped yesterday after a bigger than expected US crude stocks build. The US Energy Information Administration reported Wednesday that domestic crude supplies rose by 3 million barrels last week while the American Petroleum Institute on Tuesday reported a rise of 0.9 million barrels. April Brent crude fell 2.2% to $61.64 a barrel on Wednesday.
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