S&P 500 futures hit record high as Trump rally returns
S&P 500 index futures hit a record intraday high on Wednesday, pointing to a revival of the post-election rally, encouraged by President Donald Trump’s push for pro-growth policies. The S&P 500 and the Nasdaq Composite closed at record levels on Tuesday after Trump signed executive orders to move forward with the construction of two oil pipelines. Trump also pushed the Big Three U.S. automakers to establish manufacturing plants in the country. The Trump rally ran out of steam in recent weeks as investors fretted about the lack of detail on growth initiatives such as tax and regulatory reforms that Trump had promised during his campaign.
German Business Confidence Unexpectedly Weakened in January
German business sentiment unexpectedly slipped in January from its highest level in almost three years in a sign that momentum in Europe’s largest economy may have weakened at the start of the year. The Munich-based Ifo institute’s business climate index dropped to 109.8 from 111 in December. That compares with a median estimate of 111.3 in a Bloomberg survey of economists. Confidence in France, one of Germany’s biggest trading partners, also missed forecasts, with a gauge published by the national statistics office down 1 point to 104. The Ifo report could raise concern that heightened political uncertainty will damp Germany’s economic prospects after growth in 2016 accelerated to the fastest pace in five years on the back of domestic spending. While the Bundesbank predicts job creation will continue to increase strongly, a gauge measuring private-sector activity slipped in January.
China central bank official defends rapid foreign reserves use to keep yuan steady
A senior official at China’s central bank has defended authorities’ rapid use of foreign exchange reserves to keep the yuan currency stable, saying the benefits "outweighed the drawbacks", according to a state newspaper. "The use of foreign reserves has kept the yuan stable and prevented market overshooting," the Ren Min Zheng Xie Bao paper quoted Yi Gang, a vice governor of the People’s Bank of China (PBOC), as saying. The yuan fell 6.6 percent against the dollar last year, its biggest loss since 1994, under pressure from sluggish economic growth and a strong dollar, which have spurred capital outflows. China has spent $1 trillion in foreign reserves in the past two years as it tried to stabilize the faltering currency, the newspaper said.
Brazil’s consumer confidence rises in January on rate cuts
Consumer confidence in Brazil rose in January as a surprise inflation drop allowed the central bank to cut interest rates more aggressively, easing the burden on debt-laden families, a private survey showed on Wednesday. The Getulio Vargas Foundation, or FGV, index of consumer confidence rose to 79.3 in January from a six-month low of 73.1 in December. After inflation fell sharply, the central bank began easing monetary policy more rapidly in January and signaled interest rates could be reduced from 13 percent to single digits in coming months. "Although uncertainty remains high and prospects for the labor market continue to look bad, the good news that came with the new year raised the likelihood of a confidence rebound," FGV economist Viviane Bittencourt said in a statement.