US stocks ended little changed on Monday ahead of Federal Reserve meeting while oil prices fell. The dollar strengthened, live dollar index data indicate the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, rose 0.5% to 96.665. Federal Reserve two day meeting starts today, and investors will be looking for indication of further pace of interest rate hikes after recent positive economic reports. Improving inflation expectations supported by rising core consumer prices and strong jobs reports point to a strengthening US economy. While investors don’t expect a rate hike at the close of the meeting tomorrow, they anticipate the assessment of US economy outlook will signal two or three rate hikes this year instead of the four projected at December meeting. The Dow Jones Industrial Average closed up 0.09% higher at 17229.13, pushed up by more than 1% gains in Boeing, Nike and McDonald’s shares. The S&P 500 lost 0.13% and settled at 2,019.64 with seven of its ten major sectors closing in negative territory. Energy sector declined 0.6% as falling oil prices dragged energy stocks lower, materials sector dropped 0.7%. The volume of shares traded in US exchanges was the lowest year-to-date at 6.3 billion, about 24% below the 20-day average. Today at 13:30 CET February Advance Retail Sales will be released. The tentative outlook is negative. At 15:00 CET Business Inventories for March and National Association of Home Builders February Housing Market Index will be published. The tentative outlook is positive. At the same time February Empire State Manufacturing Index will be published. The tentative outlook is negative. At 21:00 CET January Treasury International Capital Long Term Purchases will be published.
European stocks closed higher on Monday with market sentiment buoyed by the European Central Bank decision to expand the monetary stimulus program. The euro weakened, pairing the gains after a comment from ECB chief Mario Draghi on Thursday that there would be no further rate cuts this year. The Stoxx Europe 600 closed up 0.7%, led by miners. Anglo American PLC rallied 6%, Glencore jumped 4.4%, and Swedish Boliden AB gained 1.8% despite weak industrial production report from China: lower than expected growth in industrial production boosted expectations of fresh stimulus measures from Beijing. Germany's DAX 30 rose 1.6% to 9990.26 as weaker euro supported exporter shares. Weaker euro makes euro-zone exports less expensive for buyers using other currencies. Auto maker Volkswagen added 1.7%, Daimler gained 1.8% and BMW rose 1.9%. France's CAC 40 gained 0.3% and UK’s FTSE 100 closed up 0.6%. In economic data euro-zone industrial output grew 2.1% in January, the biggest month-to-month rise since September 2009. At 11:00 CET today fourth quarter employment change will be released in euro-zone. The tentative outlook is negative for euro.
Japanese stocks fell today and Nikkei closed 0.7% lower after yen strengthened following the Bank of Japan decision to leave its monetary policies unchanged while it downgraded slightly the outlook for the economy. The central bank left the rate on some commercial banks’ reserves at minus 0.1% and removed language from its statement that it would cut interest rates further into negative territory if needed. The bank also left its asset-purchase program unchanged at 80 trillion yen ($705 billion) a year. Stocks in Asia were retreating too: Australia’s ASX 200 index was down 1.4%, Hong Kong’s Hang Seng index was lower 0.7% while the Shanghai Composite Index edged up 0.1%.
Oil futures prices are extending losses today after closing more than 3% lower on Monday as Iran reportedly said it intends to ramp up its crude oil production to the pre-sanctions level of 4 million barrels-per-day from about 3 million bpd currently. April WTI crude fell 3.4% to $37.18 a barrel on the New York Mercantile Exchange after finishing last week roughly 7.2% higher.
Copper is falling today as growing stockpiles in China spurred concerns about falling demand as economic growth of the world’s biggest user of the metal slows down. China is expected to grow at its slowest pace in decades with the official objective of growing at 6.5 – 7% in 2016.