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U.S. Interest Rates Back In Focus As Greek Crisis Subsides

Published 07/17/2015, 05:25 AM
Updated 04/25/2018, 04:40 AM

Stock markets worldwide climbed yesterday, while the dollar edged up against its peers as discussion of a U.S. interest rate hike becomes more specific. European markets are expected to open a bit lower today, but yesterday, they climbed nearly 2%, as Athens approved significant spending cuts in order to keep the country in the Eurozone. The European Central Bank (ECB) has also increased its emergency funding for Greece, leading to hopes that the banking system will return to normal operations in the country. The UK’s FTSE added 0.7% as Ashtead, ARM Holdings (LONDON:ARM) and the Weir Group (LONDON:WEIR) gain 1.5-3.6%. The French CAC rose 1.8%, as all 40 components closed the session with gains. Major exporters such as Renault (PARIS:RENA) and Michelin (PARIS:MICP) led the gains with 3.4% and 2.8%, respectively. The German DAX added 1.9% as exporters such as MILAN:BMW, Continental, Daimler (OTC:DDAIF) and Volkswagen (XETRA:VOWG) rebound from recent weakness with gains of between 2.8% and 3.6%.

U.S. shares also climbed after the release of positive news from Europe. The Nasdaq climbed 64.24 points (1.3%) to trade at 5163.18 – a new record high. So far, the index is up 3.5% this month alone. A stream of positive earning reports from the technology sector aided gains. Netflix (NASDAQ:NFLX) rallied 18% and eBay (NASDAQ:EBAY) added 3.4%, as better-than-expected quarterly profits lifted stocks. The Dow Jones industrial average added 0.4% to trade at 18120.25, and the Standard and Poor’s 500 Index added 0.8% to trade at 2124.29. These gains are seen as part of a recent rebound in U.S. stocks after remaining flat in the first quarter. So far, the S&P added 3% in July, followed by the Dow Jones with a 2.8% gain.

The euro remained weak against the U.S. dollar, hovering near seven-week lows at $1.0855. The talks of a U.S. interest rate hike and the possible resolution of the Greek crisis have returned the focus to the disparity in monetary policy between Europe’s expansion and the U.S.’s talks of tightening monetary policy with a rate hike. This trend propelled the dollar to a three-week high against the yen at 124.235. The dollar index, comparing the dollar to a number of its peers, has reached its highest in nearly two months at 97.756.

The U.S. consumer price index (CPI) will be released today, detailing the change in prices across a number of major sectors. Federal Reserve officials have reiterated their data-dependent position on interest rate hikes, making inflation-related reports such as the CPI even more interesting at the moment. U.S. housing data will be released later in the day.

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