Weak US data weigh on market sentiment

US equities closed little changed on Monday as gains in consumer staples stocks pushed the market indexes higher while losses in energy sector following declines in oil prices capped the gains. The dollar weakened after a disappointing inflation report: the 1% year-on-year rise in personal consumption expenditure index in February, the Federal Reserve’s preferred inflation gauge, was below the 1.2% gain recorded in the previous month. Slowing inflation makes a rate hike less likely as the Federal Reserve has indicated it wants to see inflation rise closer to 2% before raising interest rates again. The live dollar index data indicate the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, fell 0.2% to 95.919. The Dow Jones Industrial Average closed up 0.11% at 17535.39, led by 1.6% gain in 3M Company. The S&P 500 added 0.05% and settled at 2,037.05, helped by 0.51% and 0.43% gains in consumer staples and consumer discretionary sectors respectively which were offset by 0.36% and 0.34% losses in utilities and energy stocks. Commerce Department report showed consumer spending barely rose in February, edging up just 0.1% as households cut back on goods purchases. At the same time the January reading was revised down to 0.1% from previously reported 0.5%. Lower consumer spending indicates slower growth of US economy in the first quarter as consumer spending accounts for more than two-thirds of US GDP. A positive development was recorded in housing market with pending home sales rising 3.5% in February.
The volume of shares traded in US exchanges was low at 5.1 billion, about 36% below the 20-day average, as many European markets were closed for Easter Monday. After weak economic reports and previous comments by Federal Reserve Presidents in support of interest rates hikes sooner than later, investors will be watching closely Fed Chair Janet Yellen's speech today for clues about when the central bank might raise interest rates. Janet Yellen will speak on economic outlook and monetary policy in New York at 17:30 CET today. At 15:00 CET S&P and Case-Shiller Composite Home Price Index will be released. The tentative outlook is neutral. At 16:00 CET Conference Board’s Consumer Confidence Index for March will be published. The tentative outlook is positive.
European markets were closed on Monday and stocks are rising after exchanges opened today. The euro is retreating today after strengthening to $1.1201 late Monday compared with $1.1165 late Friday. No important economic data are expected in euro-zone today.
Asian stocks are falling today after weak US economic data spurred concerns about slowing growth in the world’s biggest economy. Chinese stocks are in retreat with Shanghai Composite Index down 1.2%. Nikkei fell 0.2% today as market sentiment was undermined by weak US data. Exporters including Toyota Motor, Nissan Motor and Isuzu Motor lost more than 1% despite weaker yen as investors were concerned about slower growth in their major export market.
Oil futures prices are extending declines today after closing in negative territory for four sessions in a row. May Brent crude edged down 0.4% to $40.27 a barrel on London’s ICE Futures exchange on Monday. Investors are concerned about the effectiveness of a possible agreement to freeze crude oil production at January levels by major producers at April 17 meeting in Qatar when there are no signs of rising demand. Industry group the American Petroleum Institute will release its estimate of US weekly inventory today at 22:30 CET, analysts expect another rise in crude stockpiles.