Market Insights 2/19/2020

Equities around the world were higher today as worries over the coronavirus appeared to ease somewhat on the heels of a report that China’s state-owned enterprises are getting back on line and as the number of new cases fell for the second-straight day.

Treasury yields were slightly higher and the U.S. Dollar was higher versus most of its major peers.

Crude oil prices were solidly higher, which made energy the best performing sector on the day. Gold also gained ground.

The Markets…

The Dow Jones Industrial Average rose 116 points (0.4%) to 29,348

The S&P 500 added 17 points (0.5%) to 3,387

The NASDAQ was up 84 points (0.9%) to 9,817

829 million shares were traded on the NYSE and 2.4 billion shares changed hands on the NASDAQ

WTI oil rose $1.24 to $53.29 per barrel and wholesale gasoline was up $0.05 to $1.66 per gallon

The Bloomberg gold spot price was up $8.20 to $1,611.80 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.1% to 99.59

Housing construction activity and wholesale inflation top forecasts, Fed meeting details

Housing starts for January declined 3.6% month-over-month to an annual pace of 1,567,000 units, above the Bloomberg forecast of 1,428,000 units. December starts were revised higher to an annual pace of 1,626,000. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, jumped 9.2% m/m to an annual rate of 1,551,000, north of expectations of 1,450,000 units.

The Producer Price Index (PPI) showed prices at the wholesale level in January rose 0.5% m/m, above forecasts calling for it to match December’s unrevised 0.1% gain. The core rate, which excludes food and energy, also gained 0.5% m/m, versus an expected 0.2% increase and December’s unadjusted 0.1% rise. Y/Y, the headline rate was 2.1% higher, above projections of a 1.6% increase and the prior month’s unadjusted 1.3% gain.

Minutes from the late-January meeting of the Fed were released this afternoon. The minutes showed committee “participants discussed how maintaining the current policy stance for a time could be helpful in supporting U.S. economic activity and employment in the face of global developments that have been weighing on spending decisions.”

Treasuries were slightly lower, with the yield on the 2-year note 1 bp higher to 1.42%, the yield on the 10-year note fractionally higher at 1.56% and the 30-year bond rate flat at 2.01%.

Global market join U.S. in rally

Global equities regained ground today as worries over the coronavirus appeared to ease somewhat on the heels of a report that China’s state-owned enterprises are getting back on line. The euro was little changed versus the U.S. dollar and most European yields fell on the day.

The U.K. FTSE 100 Index and Italy’s FTSE MIB Index were up 1.0%, France’s CAC-40 Index rose 0.9%, Spain’s IBEX 35 Index and Germany’s DAX Index gained 0.8%, and Switzerland’s Swiss Market Index advanced 1.1%.

China’s Shanghai Composite Index declined 0.3% but the Hong Kong Hang Seng Index gained 0.5%. Japan’s Nikkei 225 Index advanced 0.9%, South Korea’s Kospi Index ticked 0.1% higher, Australia’s S&P/ASX 200 Index increased 0.4% and India’s S&P BSE Sensex 30 Index gained 1.1%.