And just like that, the 3 major indices close higher on the week

The 3 major indices (Dow, S&P and Nasdaq) rode a wave of buying higher on the day, closed at the highs and just like that, erased the declines for the week.

  • The Dow, S&P and Nasdaq each had best day of the new year
  • Dow and S&P posted their first weekly gain in four weeks
  • NASDAQ posts its first weekly gain in five weeks

A look at the final numbers shows:

  • Dow industrial average rose 564.67 points or 1.65% to 34725.46
  • S&P index rose 105.36 points or 2.44% to 4431.86
  • NASDAQ index rose 417.80 points or 3.13% to 13770.58
  • Russell 2000 rose 37.22 points or 1.93% to 1968.51

For the week,

  • Dow industrial average rose 1.34%
  • S&P index rose 0.77%
  • NASDAQ index squeaked out a 0.01% rise (good enough to have its first weekly gain in five weeks)

For the Russell 2000 it closed last week at 1987.91 and is ending today at 1968.51. For the week, it fell 19.4 points or -0.97%.

The small-cap index is still down some 19.4% from its high close reached on November 8. However, the low price today at 1901.35 got within 12 points of the 38.2% retracement of the move up from the March 2020 low before bouncing higher.

German Q4 preliminary GDP -0.7% vs -0.3% q/q expected

  • Prior +1.7%
  • GDP (non-seasonally adjusted) +1.4% y/y
  • Prior +2.5%
  • GDP (working day adjusted) +1.4% y/y
  • Prior +2.5%

Apologies as there is a bit of a delay on the post due to technical difficulties. The German economy contracted more than expected in Q4 last year, owing to the spread of omicron and restrictions associated. The new year has started off with more resilience though, so there is at least some optimism on that front.

Q4 GDP preliminary estimates in focus in Europe later today

It was all about the dollar as the market continues to digest the post-Fed sentiment in trading yesterday.

Things are much more quiet so far today but we could see the action ramp up once European traders enter the fray later and as we get towards the Wall Street open. Equities were more subdued in a back and forth session (again). It has been a week with plenty of pushing and pulling but buyers are still hanging on despite the setbacks.

For now, US futures are slightly higher but that belies any major optimism on the week.

We’ll be getting some Q4 GDP releases in Europe later today but they shouldn’t mean much with the market being more forward-looking when it comes to pandemic and inflation dynamics.

As such, the market focus will continue to reside on dollar sentiment and the risk mood before the weekend comes along.

0630 GMT – France Q4 preliminary GDP figures
0700 GMT – Germany December import price index
0800 GMT – Spain Q4 preliminary GDP figures
0800 GMT – Switzerland January KOF leading indicator index
0900 GMT – Eurozone December M3 money supply data
0900 GMT – Germany Q4 preliminary GDP figures

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

IMF report on Japan

MF article 4 policy proposal to Japan:

  • Japan’s economic recovery is expected to strengthen in 2022 but balance of risks tilted to downside
  • Japan must maintain policy fiscal support to vulnerable households near-term, but continue to scale down pandemic-relief steps as recovery takes hold
  • looking ahead, Japan’s fiscal policy should be ‘nimble and flexible’
  • longer run, Japan must consider taking steps for fiscal consolidation such as raising consumption tax rate, hike taxes on property and capital income
  • BOJ must maintain accommodative monetary policy with inflation projected to remain below 2% target in medium term

Senior IMF official:

  • BOJ should continue current easy policy as inflation likely to move in 1% range over next few years
  • Japan likely to see inflation momentum build up this year as consumption rebounds
  • now is not time to shift yield target to shorter maturity, which becomes option if BOJ needs to ramp up stimulus
  • BOJ should consider further steps to make policy framework sustainable, such as targeting yield with shorter maturity than current 10-year yield

Nothing of much insight from the IMF here. (more…)

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