US stocks and US dollar sky-rocketed on Friday on the Bank of Japan (BoJ) decision to go negative (see live us dollar index data). Investors believe ECB may take the same step which will revive the global economy. Nevertheless, the US S&P 500 index fell 5% since the start of the year showing the worst performance since 2009. It advanced 2.5% on Friday which was its record daily growth since September. Another factor to support the US stocks was the US Q4 2015 GDP data. The pace of economic expansion slowed down to 0.7% from 2% year over year in Q3. According to the market participants, this may postpone the anticipated Fed interest rate hike by 1% this year. Now it depends largely on the Q1 2016 GDP. Its pace of growth is expected to accelerate and climb above 2% but the data are still awhile away from now. The Microsoft quarterly earnings came out of Friday exceeding expectations and the company’s stocks advanced 5.8% on the data. Altogether, the gross earnings of S&P 500 components that have already released their data fell 4.1% but increased 2.1% ex. energy sector. Last week the Dow Jones Industrial Average index rose 2.3%, S&P 500 added 1.7% while Nasdaq climbed 0,5%. The trading volume on the US exchanges was 10bkn stocks which is 22% above the average for the last 20 trading days. Today at 14:30 СЕТ the December personal spending was released in the US which fell to 0-0.1%. The January ISM is still awaited today.
European stocks are correcting down today after their rally on Friday. The downward retracement was caused by the negative data from China where the industrial PMI fell to 49.4, the lowest in 3.5 years. On this news the China’s Shanghai Composite stock index lost 1.8%. The additional negative for European stocks came from the patent dispute settlement of Nokia and Samsung. Nokia and Alcatel stocks tumbled 10% on the news Samsung may receive more than 800mln euros from them. No important macroeconomic news is expected today in EU. Despite the investors’ concerns that ECB may cut the rates as well, the euro is still traded in a narrow range.
Nikkei index and yen stopped growing and remained almost unchanged today. Investors are trying to estimate the probable fall in industrial production in the nearby China. The negative Bank of Japan rate will have a negative effect on the banking sector. For this reason the Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Japan Post Bank stocks slumped 5.5% to 8%. The Topix Banks Index tumbled 6.6%. Meanwhile, the final January PMI slightly and the sales of means of transport fell in Japan. The Bank of Japan Governor Haruhiko Kuroda will speak early on Wednesday morning.
Oil prices stopped growing today amid the decline in China’s industrial production and the news from Iran. Last week they edged up on the talks Russia and OPEC may discuss the possibility of production cuts. Moreover, Iran increased production less than expected – only by 70 thousand barrels a day. In January it produced 3,285mln barrels a day compared to 3,215mln barrels in December. Remember, that Iran stated it was planning to raise its production by 500 thousand barrels a day.
Gold continued edging up amid negative macroeconomic data from China and the US economic slowdown. Investors consider the metal as a safe-haven asset in case of the heightened global economic risks. In January the gold prices showed the maximum monthly growth in a year surging 5.4%. According to the U.S. Commodity Futures Trading Commission, the net longs in gold on COMEX reached the 12-week axis.