US broad stock market ends the week higher - 20.2.2017

Dow closes at record high seventh session in a row

US stock indices ended at new highs on Friday with the Dow Jones industrials recording its seventh record close in a row. The dollar retraced higher: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, closed 0.4% higher at 100.932. The Dow Jones average rose less than 0.1% to a record high 20624.05 with shares of UnitedHealth limiting gains. The blue chip index recorded 1.8% gain for the week. S&P 500 closed up 0.2% settling at a record 2328.25, led by telecom and consumer staples stocks. The broad market closed up 1.5% for the week. The Nasdaq composite index gained 0.4% to a record high 5838.58, up 1.8% on week.

Stocks climbed higher as more than 80% of the S&P 500 constituents have reported earnings this season with gains tracking at 4.6% from a year ago, poised to record the first two seasons of consecutive year-over-year earnings growth since early 2015. Driven by investor optimism about US outlook, buoyed by President Trump’s promises to cut taxes and implement major infrastructure spending programs, the rally continues with stock valuations measured by price-to-earnings ratios based on future earnings – the S&P 500 index 12-month forward P/E, climbing to 17.6, its highest level since 2004. Today US markets are closed for President’s Day. This week Markit will publish its purchasing manager’s index for February tomorrow, and January existing home sales and minutes from the Federal Reserve’s latest policy meeting will be released on Wednesday. On Thursday jobless claims will be published, and on Friday January new home sales and the February consumer sentiment index will come out. No major data are expected today.

DJI

European stocks end the week higher

European markets ended higher on Friday led by Unilever and Essentra shares. Both the euro and British Pound weakened against the dollar. The Stoxx Europe 600 index gained less than 0.1%. The DAX 30 was little changed at 11757.02. France’s CAC 40 underperformed falling 0.7% and UK’s FTSE 100 ended 0.3% higher at 7299.96.

Shares in Anglo-Dutch consumer goods group Unilever rallied 13% on news the US packaged-foods heavyweight Kraft Heinz Co. made a merger proposal to Unilever that was declined. Today shares of Unilever fell 8% after Unilever Chief Executive Paul Polman declined the offer as having no financial or strategic merit. In economic news, the euro-zone’s current account surplus narrowed in December from an all-time high the previous month, and a surprise 0.3% fall in UK in January was recorded instead of an expected gain. Today at 16:00 CET consumer confidence for February will be released in euro-zone, the tentative outlook is neutral for euro.

Asian stocks mixed

Asian stock indexes are mostly higher today in low volume trading with US markets closed for a holiday. Nikkei gained 0.1% to 19251.08 today as yen weakened against the dollar in thin trading despite a larger-than-expected January trade deficit as imports rose for the first time in two years. Chinese stocks are higher with the Shanghai Composite Index up 1.2% and Hong Kong’s Hang Seng Index 0.5% higher. Australia’s All Ordinaries Index is 0.18% lower with the Australian dollar edging higher against the dollar.

Oil prices rebound

Oil futures prices are rebounding today after closing lower for the previous week on Friday. Concerns about increasing US shale oil output as the number active US drilling rigs rises persist. Goldman Sachs estimates, we estimate US oil production would increase by 405,000 barrels per day between 4Q17 and 4Q16 in five shale plays, assuming the US oil rig count stays at the current level. US energy companies added oil rigs for a fifth consecutive week, Baker Hughes reported on Friday. US Investors are concerned US crude oil output increases may outweigh output cuts by major producers as OPEC reported compliance rate of around 90% with the agreed cuts of almost 1.8 million barrels per day (bpd) during the first half of 2017. April Brent crude rose 0.3% to $55.81 a barrel on London’s ICE Futures exchange on Friday, recording about 1.6% loss for the week.