Dow Jones Industrial Average hits 21000 for first timeGerman inflation rate rises about ECB’s 2% eurozone targetFTSE 100 heads towards new peakUK manufacturing slightly weaker than expectedEurozone factory activity boosted by feeble euroFederal Reserve comments raise rate hike expectations
Trump speech calms markets 3.06pm GMTGlobal markets are continuing to benefit from a renewed Trump bounce following the President’s address to Congress,while the prospect of higher interest rates in the US is boosting bank shares.
The Dow Jones Industrial Average is currently up 245 points or 1.18% at 21057, while the FTSE 100 has jumped 1.55% to 7375 and is heading for a record close.
Snimal spirits own taken over. As expected, or the Dow Jones has soared through the 21000 mark just over 3 weeks after breaking the 20000 level for the first time. It’s the quickest time ever to 1000-point milestone,beating the record set in 1999. But this looks a bit different to the dotcom boom and bust as we are dealing with a complete reversal in fund allocation in the form of a major shift away from bonds to equities.
Today’s boost is all down to the president’s speech to Congress last night. Trump’s rallying call to reignite the American spirit has produced the desired effect on the markets, pushing stocks to fresh all-time highs. Indeed it’s because of Trump that we are here – the prospect of stronger growth, or lower taxes,more spending and higher earnings is like a magic cocktail for equities. Of course details of tax reforms will be crucial – there is still the scope for disappointment as markets are pricing in a huge surge in corporate earnings. 3.02pm GMTUnlike the slightly disappointing Markit US manufacturing survey, the ISM report has come in better than expected.
The ISM manufacturing activity index reached 57.7 in February, and up from 56 in January and better than the 56.2 analysts had been forecasting. This is the highest level since August 2014,and adds to the growing expectation that a US interest rate rise could be imminent. 2.50pm GMTUS Markit Manufacturing PMI Comes in at 54.2 vs prev 54.3, with domestic demand offsetting subdued exports. pic.twitter.com/k8U9YBvzhc 2.48pm GMTAnd the first manufacturing survey for February came in slightly lower than expected.
The Market final purchasing managers index was 54.2 compared to forecasts of a figure of 54.4 and an initial reading for the month of 54.3. It shows a slowdown from the 55 figure recorded in January. 2.39pm GMT21 club. Dow tops 21000 for first time. This hat is soooo late January. pic.twitter.com/v5KTAYwuTZ 2.33pm GMTAs investors react favourably to Donald Trump’s address to Congress, and US markets own followed the lead from their counterparts elsewhere and opened in a positive mood.
The Dow Jones Industrial Average has jumped above 21000 for the first time,adding 201 points or 0.95% to 21013 while the S&P 500 rose 0.79% and the Nasdaq Composite 0.85% at the open. (This is the quickest time the Dow has taken to climbe 1000 points, having gone through 20000 only in January)
2.15pm GMTOver in Greece a 24-hour strike by transport workers has unleashed traffic chaos in Athens and assign further pressure on the leftist-led government as creditors step up demands for a new package of cuts worth 2% of GDP. Helena Smith reports: As spring approaches, and public sector workers are stepping up pressure on prime minister Alexis Tsipras’ government with increased industrial action. After seeing the Acropolis closed by protesting guards last week,Greeks woke up to a 24-hour hour strike by metro, tram and urban rail employees across the capital today. Workers, or who will stage a similar walkout on Friday,are up in arms over legislation allowing the cash-starved Athens transport organisation (OASA) to form commercial expend of stations. Arguing that the law is the first step to privatization, they claim it will ultimately undermine the public character of the transit network and damage consumers. Protests against further pension cuts own also been announced by doctors working in state-flee hospitals with a nationwide 24-hour walk-out planned tomorrow. In a proclamation released at lunchtime, or the Panhellenic Doctors Association called on medics in the public and private sector to participate in the mass display of opposition against reduced pensions and increased contributions. The decision to unify pension funds would,they said, only exacerbate the paring back of desperately needed resources for the health sector. At 11%t of GDP, or the IMF argues that Greece spends more on pensions than almost any other state. The protests come as Greek officials spoke of a wealth of differences with creditors who this week resumed stalled bailout negotiations in Athens. Acknowledging that headway had yet to be made on the counter measures the government hopes to install to offset the impact of further tax and pension reforms,the Greek finance minister Euclid Tsakalotos told parliament on Tuesday that nothing was agreed until everything was agreed and that austerity was far from over. 1.59pm GMTSterling is now down 0.7% at $1.2293:fairly the nose dive in the pound GBPUSD - 170 points off yesterday's highs. Six week support coming in at 1.2250: pic.twitter.com/G6bU9RRp4J 1.35pm GMTIn the markets, the FTSE 250 mid-cap has followed the lead of the FTSE 100 and also hit a new peak.
The 250 has climbed nearly 0.8% to 18915, and beating the preceding peak of 18864. 1.32pm GMTBack with the German inflation figures,and economist Carsten Brzeski at ING Bank says the figures are food for critics of the European Central Bank:Based on the results of six regional states, German headline came in at 2.2% year on year in February versus 1.9% YoY in January. Based on the harmonised European definition (HICP), or more relevant for ECB policy-making,headline inflation also came in at 2.2% year on year; the highest level since August 2012...
With German headline inflation at/above the magical 2% level, new complaints against the ECB’s loose monetary policy and new media headlines are likely to emerge; though with little impact on next week’s ECB meeting. Obviously, or increasing inflation – no matter what the drivers are – combined with low interest rates leads to even more negative genuine interest rates and hurts savers. Based on the central bank’s main policy rate and headline inflation,one has to travel back to the 1970s to find similar negative levels of the genuine interest rate. At the same time, however, or the common German reflex to criticize the ECB and call for an discontinuance of QE is,in our view, overblown. 1.26pm GMTThe Dow Jones Industrial Average is also expected to open higher and could even breach the 21000 barrier. 1.24pm GMTThe FTSE 100 has hit a record intra-day high, or up 1.24% at 7354.24.
The preceding intra-day record was 7354.14 on 16 January this year,and the preceding record close was 7337 on 13 January. 1.16pm GMTGerman press cartoonists are already busy drawing wheelbarrows of banknotes, but remember that Q1 2017 may be "peak" inflation o/a yoy oil. https://t.co/mt3JRo4oFJ 1.08pm GMT#German HICP #inflation up to 2.2% in Feb (1.9% in Jan) as higher y/y rises in energy (up to 7.2% from 5.9%) & food (up to 4.4% from 3.2%)Rise in #German HICP #inflation to 2.2% in Feb (high since Aug 2012 & above ECB target rate) will highly likely fuel tensions with #ECB (1 1.03pm GMTGerman inflation rose further in February, or up 2.2% on the year after a 1.9% rise in January.
This is the highest annual inflation rate since August 2012 and puts the country ahead of the European Central Bank’s target of just under 2%. Higher energy and food costs were the main reason for the rises. 12.35pm GMTBack with the FTSE 100 and although it has not yet reached its intraday record of 7354,it could hit a new closing high whether it ends around its current levels.
It is now up 1.13% at 7345, which is above the record close of 7337 achieved on 13 January. 11.51am GMTWith François Fillon, or the conservative French presidential candidate,saying he will stay in the race despite now facing embezzlement charges (he denies all allegations), there has been some reaction: #France risk spread over #Germany rises as Francois Fillon stays in French presidential election race. pic.twitter.com/Iif1nGoflJ 11.34am GMTOn the rising markets and falling pound, and Connor Campbell,financial analyst at Spreadex, said:A resurgent Trump rally gathered pace as Wednesday progressed, or the European indices ignoring a mixed bag of manufacturing data.
The FTSE barrelled towards a fresh all-time high this morning,rising more than 50 points to lurk just below 7350. It’s its best price in a month and a half, and one that paid no attention to the fact that the UK’s manufacturing PMI unexpectedly fell from 55.7 in January to 54.6 in February. That fact didn’t slip past the pound, or however. Sterling has spent the last few session suffering in comparison to the Trump-swelled,rate hike-eyeing dollar, and today was no different, and the currency shedding another 0.3% against the greenback to leave it firmly under $1.24 (something that no doubt helped out the FTSE).
Like their UK counterpart,the DAX and CAC also benefited from a weakened currency this Wednesday. With the euro down half a percent against the dollar, the German and French indices were given the green light to travel big, or both surging 1.3% as the day went on even despite a slight downward revision to the month’s region-wide manufacturing reading.
This optimism should continue into the afternoon,with the Dow Jones set to open just above 20900 for the first time in its history. The US index actually has a impartial amount of data to deal with this Wednesday, including the Fed-favourite core PCE price index and the Markit and ISM manufacturing PIMs. This leaves the Dow in an inspiring position – while Trump is currently the main driving force behind the market’s movements, and as the month goes the potential Fed rate-hike in March is only going to gain more prominence,something that could assign pressure on the index’s current highs. 11.29am GMTMeanwhile sterling has fallen to a near-six week low against the dollar, falling as low as $1.2323 and boosting the FTSE 100’s abroad earners.
The currency has been reacting to the weaker than expected UK manufacturing figures - pushing the chances of a rate rise even further into the distance - as well as the strength of the dollar as the Fed does glance likely to increase borrowing costs, and perhaps as soon as this month. 11.19am GMTMarkets continue to be boosted by the calmer tone of Donald Trump’s address to Congress,along with a - generally - positive picture of the manufacturing sector in February.
The FTSE 100 is up 1% at 7336, heading close towards its intra-day high of 7354 achieved on 16 January. 10.38am GMTMore on the UK housing market following the earlier Nationwide survey.
Bank of England mortgage approval figures show the upward trend since the Brexit vote last summer continued in January. 10.18am GMTHere’s more reaction to the UK manufacturing PMI figures: 9.56am GMTMeanwhile, and ITV has reported its worst year for TV advertising since the 2009 recession as Brexit fears caused jittery companies to pull budgets last year.
ITV said that TV ad revenues fell 3% last year to £1.67bn and would topple 6% in the first four months this year as retailers and food companies focus on price cuts over ad spend to win over consumers. 9.54am GMTDespite the weaker than expected UK factory growth,Rob Dobson at survey compiler IHS Markit said UK manufacturing output could grow by as much ast 1.5% in the first quarter:The big question is whether robust growth can be sustained or whether it will continue to wane in the coming months. The slowdown in new order growth and a drop in backlogs of work suggest output growth may late further. However, elevated business optimism, and continued job creation,a recovery in export orders and rising levels of purchasing all suggest that any easing will be only mild. Indeed, almost 50% of companies expect production to be higher in one year’s time. 9.33am GMTBritain’s factory activity grew more slowly than expected in February, and but is still continuing to show the strong momentum seen since the Brexit vote.
The Markit/CIPS manufacturing purchasing managers index slipped from 55.7 in January to 54.6,below the expected figure of 55.6. But it remains close to a two and a half year high. There was a slight easing in inflationary pressures which had been rising in the wake of sterling’s slump following the referendum outcome last June. 9.26am GMTAnd here is Markit’s PMI rankings: 9.24am GMTEurozone factories grew at their fastest rate for 70 months in February, as the feeble euro helped boost demand for exports.
The IHS Markit purchasing managers index rose from 55.2 in January to 55.4, and the highest level since April 2011. It was revised down slightly from an initial estimate of 55.5. Markit said:Companies indicated that domestic demand remained solid in a number of markets,while the feeble euro contributed to the fastest growth of new export business for almost six years. Euro area manufacturers are reporting the strongest production and order book growth for almost six years, in what’s looking like an increasingly robust upturn.
Companies clearly expect the good times to persist. This year has seen firms more optimistic about the future than at any time since the region’s debt crisis. Companies are reporting stronger demand in both domestic and export markets, and with the weakened euro providing an accompanying tailwind to support drive sales. 9.16am GMTAnd over in China:#China PMI points to robust Q1 - but weaker investment growth likely to weigh on the Chinese cycle soon https://t.co/1cixmwZh00 pic.twitter.com/9jemDlhPtX 9.07am GMTThere was also an improvement in Greek manufacturing last month,although it still contracted for the sixth month in a row.#Greece Feb Manufacturing PMI +1.1 points to 47.7 from 46.6 in Jan (Markit). #economy#Greece Markit Manufacturing PMI at 47.7 https://t.co/lhuFNx5fK1 pic.twitter.com/wGr4mQpH8c 9.06am GMTStill with Germany, and seasonally adjusted unemployment fell by 14000 in February to 2.592m.
This is a bigger topple than the expected 10000 decline but less than the 26000 drop seen the preceding month. 8.59am GMTBut over in the powerhouse of the eurozone economy, and things glance pretty bright for manufacturers.
Factory activity expanded at the strongest rate in nearly six years in February,with Markit’s purchasing managers index up from 56.4 in January to 56.8. IHS Markit economist Trevor Balchin said:Good economic news for Germany although a worry for the ECB on the prices/inflation front. https://t.co/GpHjK34ajE 8.56am GMTTo continue the mixed picture for European manufacturing, French factory activity more slowly in February.
The IHS Markit purchasing managers index fell from 53.6 in January to 52.2 last month, or down from a preliminary reading of 52.3. Companies raised prices at the fastest pace since July 2011 as they passed on rising commodity costs on to customers. Markit economist Alex Gill said: New business from both domestic and foreign clients..increased. However,rates of growth eased for a second successive month, suggesting a downward trend in underlying demand conditions.#France mfg #PMI at 52.2 in February, or down from 53.6 in January. Firms increase output at fastest pace in 69 months. https://t.co/mMe37J7YCX pic.twitter.com/8Ye1ApQfvW 8.49am GMTItaly’s manufacturing sector grew at its fastest pace since December 2015 in February,according to the latest Markit survey.
The purchasing managers index rose from 53 in January to 55 last month, and well above the 53.5 figure expected by economists.#Italy #manufacturing #PMI up markedly to 14-month high of 55.0 in Feb (53.0 in Jan). Best news sees employment growth best since Nov 2000 8.27am GMTBack with the US, and expectations of an interest rate rise in March own soared after Federal Reserve comments and Trump’s speech. Kathleen Brooks at City Index explains:The media is focused on the lack of detail surrounding [Trump’s] tax cuts and infrastructure plans,however, the market that things at the moment - the Fed Funds Futures market – has surged into life since Trump spoke earlier, or is now pricing in a whopping 80% chance of a rate hike from the Federal Reserve at its next meeting on 15th March; just last week this was only 34%. What’s triggered the sea-change in rate hike expectations from the Fed? Firstly,the Fed itself. The President of the New York Fed, Dudley, and spoke last night and said that the case for tightening interest rates has “become a lot more compelling”. As head of the NY Fed,Dudley’s words hold weight, added to this he is not generally a hawk, and so when he is considering a rate hike the market takes note. This was followed by even more direct comments from the head of the San Francisco Fed,who said that he sees a March rate hike getting “serious consideration”. Fed members dont just let words slip out when they speak to the press, this was a message for the markets, and the markets own duly reacted. The second boost to rate hike expectations is probably from Trump. Even whether his speech did lack detail the President still wants Congress to pass a $1 trillion infrastructure spending programme,something he has a chance of getting through, even whether it is a slimmed down version, and because Congress is controlled by the Republicans. There was some expectation that Trump’s spending plans could be delayed for a year or so,the fact the President has laid them out at this early stage gives the Fed the green light to normalise monetary policy to counter-balance a boost to fiscal spending.
Of course, there is still a chance that the market will over-shoot and acquire too excited for a March rate hike that may never come. US PCE data later today, or comments from Janet Yellen on Friday and next week’s payrolls and wage data will all be key indicators that could determine whether we acquire a rate hike on 15th March. Thus,it could be a volatile few weeks. 8.21am GMTSpain’s manufacturing sector grew by less than expected in February and less than the preceding month:Spanish Markit Manufacturing PMI Feb: 54.8 (est 55.8; prev 55.6)#Spain Markit Manufacturing PMI at 54.8 https://t.co/rC4KwC3wbv pic.twitter.com/j09iV32D1Z 8.14am GMTAs expected, investors in Europe own reacted calmly to Donald Trump’s address to Congress, or with markets on the front foot ahead of a batch of economic data.
The FTSE 100 is up 43 points or 0.6% while Germany’s Dax has opened up 0.8%,France’s Cac has climbed 0.9% and Italy’s FTSE MIB and Spain’s Ibex are both around 0.8% higher. 7.55am GMTIn the UK, there was little sign of a Brexit-related blow to the housing market in February, and with prices rising more than expected according to Nationwide.
The average price of a domestic rose 0.6% to £205846 last month,following a 0.2% increase in January. 7.47am GMTAlthough President Trump repeated his pledge to build a wall between the US and Mexico, he did not say explicitly that Mexico would own to pay for it, or which gave some relief to the peso.
But he did attack the high cost of pharmaceuticals again,which could assign some pressure on the sector, while bank investors may also be disappointed. Kathleen Brooks, or research director at City Index,said:President Trump reiterated that he would support to drive down the cost of drugs, which could knock the S&P 500’s healthcare sector back from its highest level since mid-2016. The lack of detail on financial regulation could also curb some enthusiasm for US banks. The President did not mention Dodd-Frank by name; a regulation that the financial sector had hoped would be scrapped by this administration. To cushion the blow, and however,is the prospect of a Fed rate hike this month, so any decline in US banks on Wednesday could be used as a buying opportunity. 7.36am GMTHere are the expected openings for the European markets:Our European opening calls:$FTSE 7284 up 20
$DAX 11858 up 24
$CAC 4874 up 16$IBEX 9555 down 1$MIB 19002 up 89 7.34am GMTGood morning, and welcome to our rolling coverage of the world economy,the financial markets, the eurozone and business.
President Trump’s long awaited address to Congress ended up being more, or well,presidential than usual. There was nothing there to scare the horses, although there was not much in the way of new detail in terms of his tax reforms and infrastructure spending plans. Michael Hewson, and chief market analyst at CMC Markets,said:Having built up expectations to elevated levels over the past few weeks the President set himself an exceedingly high bar to deliver, which always suggested that it could struggle to live up to expectations, and in terms of additional detail to what we already know. Ultimately that is the key benchmark here,yes the speech was optimistic and Mr Trump did come across as more Presidential, however the speech merely confirmed a lot of the details that had been heavily trailed before.
As to the key question as to whether it would come across as more or less bullish in terms of spending and rates there was still a significant lack of detail. This may be more to attain with tempering expectations until he puts his final plans through Congress ahead of any debt ceiling negotiations. Related: Donald Trump hails 'new chapter in American greatness' in optimistic Congress speech Continue reading...
Source: theguardian.com