US markets advanced on Tuesday on hopes the Greek debt stalemate will soon be resolved. The S&P 500 started the session lower and steadily rose, adding 0.2% and posting the second record close this year. Investor optimism was boosted by news reports that Greece may ask for an extension of the country’s loan agreement on Wednesday. Market participants largely discounted the economic data that came in below expectations on Tuesday. The Empire State Manufacturing Index moved slightly lower but remained in positive territory, indicating improving business conditions. Also, the Housing Market Index fell to four month low at 55, still indicating a favorable outlook of construction in the months ahead. The ICE US Dollar Index, a measure of the dollar’s strength against a basket of six major currencies, fell 0.12% to 94.0880. Today at 14:30 CET January Housing Starts, Building Permits and PPI for final demand will be released in US. At 15:15 CET January Industrial Production, Manufacturing and Capacity Utilization will be published. The industrial production is forecast to rise. The tentative outlook is neutral. And at 20:00 CET the Minutes of the January 27-28 FOMC Meeting will be released. The investor interest will be focused on whether it will contain new information on when the committee plans to increase the borrowing costs.
European stocks recouped early session losses but gains were limited by the uncertainty about Greece’s future in the euro zone. The Stoxx Europe 600 ended 0.1% higher having opened lower after Greece’s new anti-austerity government rejected an extension to its 240-billion-euro ($272 billion) bailout program under the conditions offered by its creditors on Monday. A new meeting of euro-zone finance ministers is scheduled for Friday. Today European Central Bank will conduct a biweekly review of an emergency liquidity assistance (ELA) to the Greece’s banking sector. There is little chance the ECB will not let the Greek banks to continue to use the ELA. The euro traded higher against the pound, yen and dollar Tuesday as economic data showed continued improvement in the euro-zone. The Center for European Economic Research’s, or ZEW, reported that ZEW indicator of German economic sentiment rose in February to 53.0, the highest reading since February of last year. Today at 10:30 CET labor market report will be released in UK.
Nikkei is rising today on hopes a deal on the bailout program will be reached between Greece and its creditors. Today the Bank of Japan’s monetary policy board decided to maintain the monetary stimulus program at the current annual pace of 80 trillion yen ($671 billion), as it was expected, and revised up its assessment of output.
Oil rose on Tuesday recording a gain of more than 9% over the past three trading sessions. The recent rise is the result of a weaker US dollar and increased geopolitical tensions including violence in Ukraine and the Middle East, and volatility tied to crude options expiration. Options on Nymex March crude futures contracts expire at Tuesday’s, which added to session’s volatility.
Gold fell to a six-week low approaching $1,200 an ounce on Tuesday on expectations that demand will fall as Chinese leave for the Lunar New Year holiday, which starts February 19. The market so far is discounting the apparent lack of progress in Greek debt talks, indicating expectations the turmoil will be resolved soon.