U.S. shares broke the recent trend of ending lower on Fridays with ample gains on major indexes. Friday’s session followed several days of sharp falls and comebacks. On Monday of last week, shares climbed amid rising oil prices. However, subsequent session erased these gains as China moved to devalue the Yuan, a move that weighed down on shares with high exposure to China. However, China’s decision had a more lasting effect as the move was perceived as either as the beginning of a currency war or as a way to give its exporters an unfair edge. Regardless, analysts were mostly in agreement that the move represents increasing concerns over China’s growth. The constant delivery of solid U.S. economic data did little to help the situation while the U.S. economy continued to expand at a steady but modest rate. For Friday’s session, the Dow Jones Industrial Average added 69.15 points, or 0.4%, to trade at 17477.4. The S&P 500 index rose 8.15 points, or 0.4%, to trade at 2091.54. The Nasdaq Composite gained 14.68 points, or 0.3%, to trade at 5048.24. Looking at the weekly results reveals that the indexes were only slightly higher for the week as the Dow, S&P and Nasdaq gained 0.6%, 0.7% and 0.1%, respectively.
The new week opens with more concerns over China. Asian trading was down early on Monday due to highly volatile Chinese equities despite the Yuan’s steadiness since its major decline last week. Traders are still concerned that China would further devalue the Yuan as it never explained the move in such a way that allows any predictions as to when and why such a move would reoccur. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8% earlier today, adding to last week’s 2.6% decline. In another sign that stability felt towards the end of last week may be less than meaningful, Shanghai shares on the SZSE Composite declined 1.5% in early trading after last week’s 6% gain. Worries have grown that China would further devalue the Yuan as a result.
This week’s major economic data releases begin with tomorrow’s UK CPI (consumer price index) release. The figure represents price inflation across a number of key sectors. U.S. housing data will be released later that day with the housing starts and building permits reports. U.S. inflation data will be released on Wednesday with the CPI, followed by the EIA’s weekly report of U.S. crude oil stockpiles.