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Stock markets rise, S&P500 hits new record - 18.11.2014

US stocks declined in the morning trade on Monday following unexpected news that Japan’s economy contracted for the second consecutive quarter. The US central bank report that nation’s industrial production fell 0.1% in October after a 0.8 percent increase in September, the second decline in the past three months didn’t help investor optimism either. Stocks recovered in afternoon trade after market sentiment was bolstered by the news report that European Central Bank president Mario Draghi stated during testimony to the European Parliament in Brussels that the central bank would be open to potentially buying government bonds, if needed. The S&P 500 posted a small gain of 1.5 points which was enough to push the index to a new record close at 2,041.43 , its 42nd this year. The Dow Jones Industrial Average added 13 points, or 0.1%, to 17,647.75. In a separate report, the New York Federal Reserve said its Empire State general business conditions index rose in November. Businesses remain upbeat about the future as an index for future business hit its highest level since January 2012.

sp500-index-chart

European stocks ended Monday higher after Draghi’s testimony indicated a possible start of a new round of monetary stimulus program by the ECB to help the recovery of euror zone economy. The Stoxx 600 had been lower for much of Monday’s session after data showed real gross domestic product in Japan shrank 1.6% in the third quarter. Draghi also reiterated his view that eurozone governments must enact structural reforms to foster economic growth, particularly by enacting labor reforms that would make job markets more flexible. The Stoxx Europe 600 index closed up 0.5% at 337.25, led by telecom, tech, resources and financial stocks. The euro fell to $1.2454 Monday as investors sold euros in anticipation of expansion of the monetary easing policy by ECB after trading above $1.2500 before Draghi’s remarks.

In Japan stock market is rising today after falling by 3% on Monday as investors anticipate that Japanese Prime Minister Shinzo Abe will announce later in the day that he will delay an unpopular sales tax increase by more than a year and call a general election on December 14. Investors expect that the Bank of Japan will also announce about expansion of its monetary stimulus program as its two-day policy board meeting ends on Wednesday. The unexpected GDP contraction and the expansion of monetary easing measures by Japan’s central bank indicate that the yen will continue to weaken against US dollar.

Brent crude oil fell for a second day amid signs of weakening global demand. Futures dropped as much as 0.6 percent in London. West Texas Intermediate was steady in New York. US shale drillers have said they are planning on production growth with fewer rigs despite of falling prices. More investors believe OPEC is not likely cut its output as it doesn’t want to lose its market share to US shale producers.

brent-oil-chart

Corn fell for a third day in the longest retreat this month as US farmers accelerated harvesting of a record crop. The contract for March delivery lost as much as 0.5 percent to $3.8875 a bushel on the Chicago Board of Trade and was at $3.8975 by 10:56 am in Singapore. A decline today would complete the longest such run since September 23. Soybeans also dropped. Soybeans for January delivery dropped 0.7 percent to $10.2925 a bushel.

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