FTSE -8 points at 7270
DAX -9 points at 11765
CAC -6 points at 4882
Euro Stoxx 50 -3 points at 3302
Today’s focus is again on the US markets, as the Federal Reserve (Fed) Chair Janet Yellen prepares to deliver her first testimony before the Senate Banking Committee in Washington DC since Donald Trump became the President of the United States. Although the expectations for an interest rate action in March are very low, investors worldwide are curious about the Fed’s plans to navigate through a potentially ice-cold Trump era.
The New York trading session was all about renewed records yesterday. A former Goldman Sachs (NYSE:GS) investment banker Steven Mnuchin’s appointment as the US’ new Treasury Secretary wet some investors appetite. It was yet another good day for the US stocks, which opened at all-time highs and extended their rally into the session’s close. The S&P 500 advanced to $2331.58, as the Dow Jones hit $20441.48.
The US dollar index advanced to a two-month high in New York, however pared some of gains in Asia. The US 10-year yields rebounded lower after testing 2.45%, as some big US creditors announced to unwind their positions in their US Treasury holdings.
Although the Asian traders sold into the US dollar and the US stock futures in the lead up to Yellen’s testimony, any Fed disillusion, meaning a slightly dovish or marginally less hawkish tone, could gather additional positive momentum and fuel the actual stock rally. Investors are utterly positive on stocks, while waiting for more details regarding Trump’s crunchy and ‘phenomenal’ corporate tax cut program.
The rising Chinese inflation in January was not surprising, although the overall reflation story has become a concern since the end of 2016. The consumer prices rose 2.5% year-on-year in January, while the producer prices jumped to 6.9%y/y from 5.5% a month earlier. The overheating in Chinese prices were mainly due to an early Chinese New Year and should be compensated by a correction in February, again due to a restricted economic activity during the holiday period. Shanghai’s Composite (-0.02%) and Hang Seng (-0.09%) were little changed.
In the UK, the inflation will also be the main macroeconomic focus. The consumer prices in the UK may have retreated by 0.5% month-on-month in January as a post-Christmas effect, yet the annual inflation is forecasted at 1.9%, up from 1.5% printed a month earlier. A strong inflation read could revive the Bank of England (BoE) hawks and hand the pound back to the bull’s hands.
The FTSE 100 gained 0.38% at yesterday’s session, as the broad based USD strength dented the pound’s positive momentum and benefited to risk-on stock buyers. However, the early indications at today’s session hint at a softer open in London. The FTSE is called 8 points lower at 7270p.