Morning (AM) Market Report

US stocks have advanced, putting major indexes on track to snap a recent spate of declines, buoyed by gains in industrial and energy shares as US Treasury yields eased.

Friday, 23rd February, 2018

The Dow and S&P rose and the Nasdaq fell overnight after minutes from the US Federal Reserve's January meeting showed the central bank's rate-setting committee grew more confident in the need to keep raising rates. Concerns about a faster pace of rate hikes from the central bank were eased by comments on Thursday from St Louis Fed President James Bullard that expressed concerns a "bunch of hikes" could turn Fed policy restrictive, and benchmark 10-year US Treasury yields retreated from the more than four-year highs hit on Wednesday. Market participants are still largely expecting the Fed to raise rates three times this year. Despite the recent climb in rates, many analysts expect the market to be able to absorb the rise as long as economic data remain supportive and the pace of the increase is modest.

In late afternoon trading, the Dow Jones Industrial Average was up 0.60 percent, at 24,945.82, the S&P 500 was up 0.42 percent, at 2,712.65 but the Nasdaq Composite has swung into negative territory, down 0.19 percent, at 7,204.31.

European shares fell slightly overnight as a flurry of corporate results failed to lift sentiment after a new wave of speculation about faster hikes in US interest rates soured risk appetite globally. An hour after the open, the publication of the German business confidence index, which fell more than expected in February, and a downward revision in UK economic growth cemented the gloom, although a rebound on Wall Street from losses in the previous day helped shares come off lows. The pan-European STOXX 600 index ended down 0.2 percent, having fallen as much as 1 per cent earlier in the session. The index remains down 5.7 percent from the two-and-a-half year peak hit at the end of January. Germany's DAX was fairly flat, down 0.07 percent, at 12,461.91.

Barclays was the best performing stock among blue-chips, rising 4.4 percent after it pledged to restore its full dividend with a payout of 6.5 pence per share in 2018. The earnings further buoyed optimism on British banks, a day after Lloyds reported its highest pre-tax profit since 2006. But, disappointing results, big stocks going ex-dividend and concerns over rising bond yields hit Britain's top share index on Thursday, pulling it to a one-week low. The blue chip FTSE 100 index fell 0.40 per cent to 7,252.39 points, while mid caps fell 0.3 percent.

Asia stocks were mixed, with Japan and Hong Kong's key indexes falling, but China's markets lifting on their first day of trading after the Lunar New Year holiday. MSCI's Asia ex-Japan stock index was weaker by 0.98 percent, while Japan's Nikkei index closed down 1.07 percent at 21,736.44. Hong Kong stocks pulled back from a two-week high hit in the previous session as investors took profit from sectors such as tech and financials, although the decline was capped by inflows from mainland China. The Hang Seng index closed down 466.21 points, or 1.48 percent, at 30,965.68. The Hang Seng China Enterprises index fell 1.25 percent to 12,528.64.

Ahead of the local open SPI futures were 42 points higher at 5,912.