Wall St kicks off 2018 on a solid note
European stocks fall as dollar under pressure
NEW YORK: Wall Street’s main indexes were higher yesterday, the first trading day of the year, buoyed by gains in technology and consumer discretionary stocks. Major stock indexes closed out 2017 with their best performance since 2013, powered by a combination of strong economic growth, solid corporate earnings, low interest rates and hopes of corporate tax cuts.
“The first week of trading usually suggests the overall trend of the markets which we expect to be positive,” Peter Cardillo, chief market economist at First Standard Financial in New York, wrote in a note. Oil prices hovered near their mid-2015 highs on Tuesday amid large anti-government rallies in major exporter Iran and ongoing supply cuts led by OPEC and Russia.
Gold and copper prices continued their upward march, but the greenback began the year on the back foot, with the dollar index slipping to its weakest level since September.
“While we don’t expect the Iranian unrest to reach a full blown political situation just yet, the protest will add to an already positive uptrend in oil and gold prices,” Cardillo said.
December payrolls report, data on manufacturing and service sectors are among leading indicators expected during the week, and will be scrutinized for signs of improving economic health and the number of interest rate hikes this year.
Minutes from the Federal Reserve’s December meeting, when the central bank raised rates for the fourth time since the 2008 financial crisis, will be issued today. Six of the 11 major S&P sectors were higher, led by gains in technology and consumer discretionary stocks .
Shares of Walt Disney rose 1.6 percent, giving the biggest boost to the Dow, after brokerage Macquire upgraded the company’s stock to “outperform”.
Global stock markets greeted 2018 in mixed fashion yesterday, with euro and pound strength depressing Europe while Wall Street and Asia gained ground. Trading was mostly thin as many investors were still away from their desks on extended holidays.
London and the main eurozone exchanges posted losses as the euro and pound rose against the dollar, weighing on the share prices of exportoriented multinationals. Signs of weak US inflation weighed on the greenback amid fears that the Federal Reserve may not raise interest rates as quickly as expected in 2018, possibly allowing other central banks to catch up with rate hikes of their own. Higher interest rates tend to support a currency. “The US dollar is the story for the first trading day of 2018,” said James Hughes, chief market analyst at AxiTrader. Wall Street opened mildly firmer, shaking off doubts for now about the sustainability of a strong run seen throughout 2017. Asian stocks earlier mostly kicked off the year with gains, fuelled by strong data, improving corporate profits and hopes that US President Donald Trump’s tax cuts will fire US and world growth. Sentiment was also boosted by news that both Chinese and Indian manufacturing activity continued to expand in December.
Asia markets open year on a positive note
‘Bit of profit-taking’
In Europe, however, Frankfurt, London and Paris slid in subdued deals as investors took profits and also absorbed various manufacturing purchasing managers’ index (PMI) surveys.
“A bit of profit-taking in the mining sector and the continued weakness of the dollar appeared to be driving trading, especially in Europe, with the manufacturing data having little impact on proceedings,” Spreadex analyst Connor Campbell told AFP London stocks sagged despite news of solid manufacturing output and order growth in December. “Today is all about the latest PMI manufacturing surveys: China’s looked good and India is even better, while the UK posted a decent figure,” noted analyst Russ Mould at online stockbroker AJ Bell. Asian stocks mostly opened the year with gains yesterday as traders drift back to work after the festive break, with Hong Kong the standout performer, though the dollar faced fresh pressure from most other currencies. Regional investors shrugged off dips in New York on the last day of 2017, instead building on the healthy advances fuelled by strong data, improving corporate profits and hopes Donald Trump’s tax cuts will fire US growth. They are also keeping an eye on the release of key US jobs figures at the end of the week, which will provide fresh clues about the strength of the world’s biggest economy.
Hong Kong led yesterday’s rally, jumping 1.6 percent to its highest level since late 2007, while Shanghai was one percent higher, boosted by data showing manufacturing activity in China continued to expand in December.