After a volatile stretch last week, Monday has seen the financial markets return to a more sedate pace, with slight market movements following a slight schedule of economic releases.
By Peter Martin
Monday, March 23, 2015
Stocks on Wall Street have edged higher, drawing close to all-time highs, and by early afternoon the Dow Jones was up 53 points or 0.29% at 18,181, while the S&P 500 was at 2110.6, a gain of 0.12%. It’s a testament to just how choppy trading has been this month that advances for the blue-chips today would mark the first back-to-back gain for the Dow Jones in March.
Economic news has been both light and mixed. The Chicago Fed National Activity Index became the latest indicator to point to a slow start to the year for the economy, with below-trend growth seen in this indicator for two straight months. The index came in well below expectations with a reading of -0.11, a poor result that was compounded by a steep downward-revision to the previous month’s level: the index was originally reported as being at 0.13 in January, but was today amended to -0.10. Weakness was concentrated in housing and manufacturing, while employment was a bright spot.
We have seen quite a raft of soft housing data in recent weeks, but there was some encouragement provided for the sector in today’s existing home sales report. Sales rebounded 1.2% in February, following a 4.9% contraction in January, rising to an annualized rate of 4.88 million. Year-on-year this is 4.7% higher. We will see whether the bounce extends to new homes sales tomorrow – the market consensus suggest otherwise, with the number expected to fall to an annualized pace of 462,000 from the 481,000 seen in January.
A trend that began building in the middle of last week was a reversal of the dollar’s strength, the currency coming under pressure in the wake of a Fed statement that was perceived as being more dovish than expected, and that trend has continued into the new week, with the euro and the Australian dollar in particular strengthening sharply versus the US dollar again. EUR/USD climbed 1.03% to 1.0932 and AUD/USD rose 1.22% to 0.7869.
The lower dollar has in turn helped to stabilize the oil price, despite ongoing concerns about oversupply. Saudi Arabia’s oil minister revealed that the country is producing roughly 10 million barrels a day and said there would be no Saudi cut in output unless other oil producers, including non-OPEC countries, were to co-operate in reducing their production levels. “We held meetings and we did not succeed because countries outside OPEC were insisting that OPEC carry the burden and we refuse that OPEC bears the responsibility,” said Ali al-Naimi, the oil minister for Saudi Arabia. Crude oil futures initially moved lower after these comments, but recovered as the day progressed, to be up 0.11% at $46.62 a barrel near to the close of the open outcry trading session in New York.
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