European confidence strengthens US stockmarket

Share Markets:

THE US stockmarket had a stronger performance on Friday night, following the lead set in Europe on better than expected European economic confidence data.

The Dow rose 0.4%, the S&P 500 gained 0.5% and the Nasdaq was up 0.1%. The Euro zone Euro Stoxx index jumped 1.2% for the session.

Bonds:

A lift in risk appetites and equity market gains weighed on safe haven government bonds particularly at the long end (yields rose).

Foreign Exchange:

The Aussie dollar softened against the US dollar from Friday morning and is trading around 0.9250 US cents at the time of writing.

The Aussie dollar gained ground versus the Yen, with an increase in risk appetites providing support to the local currency versus the safe haven Yen.

Risk appetites improved on better than expected economic data in the US and Europe and on hopes of stronger growth in China after Premier Li indicated the government had the necessary policies in place and would continue with infrastructure investment.

Better than expected European economic data sent the Euro higher against both the US and Aussie dollars.

Commodities:

Commodities gained ground on Friday night as risk appetites improved.

Expectations that the Chinese government may engage in stimulus to boost economic growth was positive for copper, which would see increased demand if Chinese authorities were to commence new infrastructure projects. 

The oil price was up on stronger US consumer spending data.

Australia:

There was no economic data released locally on Friday.

Europe:

Euro zone consumer confidence rose to a reading of -9.3 in March, from -12.7 in February.

Euro zone economic confidence strengthened in March, rising to 102.4, from 101.2 in February.

This was the highest reading on economic confidence since July 2011.

Euro zone industrial confidence improved to a reading of -3.3 in March, from -3.5 in February.

Services confidence was stronger, rising to 4.2 in March, from 3.3 in February.

Japan:

Inflation in Japan is edging higher, in line with current policy. In the year to March, Japan's consumer price index rose 1.3%.

This compares to a decline in consumer prices of 1.0% in the year to March 2013.

Japan's unemployment rate fell from 3.7% in January to 3.6% in February.

Japan's unemployment rate has been declining steadily since a recent peak of 5.5% in mid-2009. 

Retail spending in Japan rose 3.6% in year to February.

This was down on the 4.4% growth seen in the year to January. Japan is set to lift its sales tax from 5% to 8% on 1st April.

United Kingdom:

The final reading on UK Q4 GDP was in line with previous estimates, rising 0.7%, for a 2.7% annual rate in the year to the fourth quarter.

The UK current account deficit narrowed to £22.4bn in the fourth quarter, from a upwardly revised deficit of £22.8bn in the third quarter (it was wider than the previously reported £20.7bn deficit for the third quarter).

GfK consumer confidence improved, but remained soft at a reading of -5 points in March, up from -7 points in February.

The UK index of services rose 0.4% in January, after rising an upwardly revised 0.3% in December (previously reported as a 0.2% increase).

For the year to January, the index of services is up 3.2%, from 3.1% in the year to December.

United States:

US personal income rose 0.3% in February, which was in line with consensus expectations and follows a similar increase in January.

Personal spending also rose 0.3% in February, after a downwardly revised 0.2% increase in January (previously reported as a 0.4% gain).

This was the largest rise in personal spending in three months.

The PCE deflator, which is the inflation measure watched by the Fed, rose 0.1% in February, taking the annual rate down to 0.9% in the year to February, from 1.2% in the year to January.

This was the slowest annual rate of inflation since October and remains well below the Fed's 2 percent goal.

The PCE core deflator rose 0.1% in February, leaving the annual rate steady at 1.1% for the year to February.

The final reading on the US University of Michigan consumer confidence index for February showed confidence deteriorated to a four-month low of 80, from 81.6 in January, although the final reading was little different to the earlier estimate.


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