Oil and economic data boost markets

US stock market rallied on Tuesday as rising oil bolstered market sentiment. The dollar strengthened due to positive economic data which support the case for additional rate hikes this year. According to live dollar index data the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.2% to 98.359. The S&P 500 closed 2.4% higher at 1978.35, led by stocks in financial and technology sectors, up 3.5% and 3.1% respectively. The Dow Jones Industrial Average added 2.1% settling at 16865.08, led by JP Morgan and Apple stocks. Investor confidence was supported by Institute for Supply Management report indicating US manufacturing sector stabilized after five months of contraction. The 1.3% rise in ISM manufacturing index in February to 49.5 was higher than expected. A reading below 50 indicates a contraction, but the pace of contraction was lower after a 48.2 reading in January. Strong construction spending hitting a more than eight-year high in January also added to positive data suggesting economic growth is recovering at the start of the first quarter. Positive data relieved recent concerns the economy might be slipping into recession. Today at 13:00 CET Mortgage Applications will be released in US. At 14:15 CET ADP Employment Change will be published. The tentative outlook is positive. And at 20:00 CET Federal Reserve releases the Beige Book.
European stocks advanced on Tuesday with rising oil. The euro weakened against the dollar to $1.0865 late Tuesday compared with $1.0887 late Monday. The Stoxx Europe 600 index ended 1.44% higher, posting gains for four consecutive sessions. Germany’s DAX 30 rallied 2.34% to 9717.16. France’s CAC 40 gained 1.22%, UK’s FTSE 100 added 0.92%. Oil and basic materials stocks led the gainers. The rally was supported also by positive economic data: euro-zone unemployment rate in January slipped to 10.3% from 10.4% in December. Unemployment declined for a third consecutive month while no change was expected in January. Also the final reading of euro-zone manufacturing PMI in February rose to 51.2 after a reading of 51 in previous month. Today at 10:30 CET February Construction PMI will be released in UK. The tentative outlook is positive. And at 11:00 CET January Producer Price Index will be published in euro-zone. The tentative outlook is negative.
Asian stock markets are rising today underpinned by overnight gains in oil, China’s move to provide additional monetary stimulus by cutting the required reserve ratio 50 basis points and subsiding fears of global economic slowdown after positive economic data from US. In a move to attract more foreign direct investment authorities announced on Tuesday China will lower the threshold for foreign investment this year. Chinese stocks are rising today with Shanghai Composite Index up 4.2%. Nikkei rallied 4.1% today hitting three week high as yen weakened against the dollar on positive US manufacturing and construction data. Exporters led the gainers with Panasonic soaring 6.8%, Sony jumping 5.2% and Toyota gaining 3.4%. Tomorrow at 03:00 CET February Services and Composite PMIs will be released in Japan.
Oil prices are edging lower today on expectations of continued build in US crude stockpiles. Late Tuesday report of American Petroleum Institute, an industry group, indicated US crude stocks likely grew by 9.9 million barrels against expected 3.4 million barrels. Oil prices closed higher on Tuesday boosted by Russia’s Energy Minister Novak’s statement that 15 nations, accounting for 73% of global oil output, support a decision to stabilize oil production. April WTI crude closed 1.9% higher settling at $34.40 a barrel on the New York Mercantile Exchange. Today at 16:30 CET US crude oil inventories will be released by the Energy Information Administration.
Copper climbed 1.3% today in London. Spot gold declined 0.4% to $1,227.40 as haven demand fell with rising investor appetite for risk.