After a weak start to trading, the Dow Jones Industrial climbed to a new record high of 31,643 points and then closed with a daily gain of +0.29% at 31,613.02 points. The S&P 500 was virtually unchanged at 3,931.33 points (0.03%). On the Nasdaq technology exchange, the reallocation of investor legend Warren Buffett from Apple shares to standard stocks caused a lot of talk. The Nasdaq 100 closed -0.54% lower at 13,699.71 points. The central theme currently remains, however, mainly the increasing inflation concerns, which could lead to an unexpectedly sharp rise in interest rates. Most recently, US government bond yields had risen to their highest level in about a year.
Producer prices in the United States rose much more sharply than economists had expected at the start of the year, fueling increasingly acute fears of a sharper rise in inflation and, as a result, rising interest rates. In January, US producer prices rose sharply by +1.3% month-on-month – the strongest increase since December 2009. Analysts had on average expected an increase of only +0.4%. On an annual basis, producer prices rose by +1.7% and at the core rate, i.e. excluding energy prices, by +2.0%. Generally speaking, producer prices provide an early indication of the development of inflation.
Sales in the US retail sector increased much more strongly than expected in January. On a monthly basis, retail sales rose strongly by +5.3%, while the market had anticipated a much more moderate increase of +1.2%. This was after sales had declined by a revised -1.0% in December. Analysts pointed to the direct aid from the stimulus packages, which should encourage consumers to spend despite the ongoing tense pandemic situation.
In the minutes (Minutes) of the latest monetary policy meeting of the US Federal Reserve (Fed) on January 27, released last night, the Fed expresses more confidence about economic developments. The government's stimulus programs and the Covid-19 vaccines are giving the economy a significant boost, the Fed noted. But it will take some time before “substantial progress“ is evident, it said. Therefore, it said, the Fed must maintain its expansionary stance over the medium term, i.e., keep interest rates at record lows and continue securities purchases and lending programs. However, the danger of the economy overheating as a result of the stimulus packages is also being discussed at the top of the Fed.
British consumer prices rose slightly more at the beginning of the year. In January, the annual inflation rate increased to +0.7% from +0.6% in December. According to the statistics office ONS, higher costs for food, household goods and furniture were decisive for the slightly stronger inflation in January.
Italy's new Prime Minister Mario Draghi has called on politicians to stand together in the fight against the corona pandemic. “Unity not an option, but a duty,“ Draghi said during his inaugural speech to the Senate in Rome. The former ECB chief cited a rapid Covid-19 vaccination campaign and reforms in the economy and administration as the most important goals of his bipartisan government. Turning to Brussels, Draghi stressed that the use of the corona aid of around EUR 210bn would be in compliance with EU requirements and would strengthen digital innovation and ecological transformation as well as social equality.
|14:30||US||Housing Starts (January, m/m)||+4.2%|
|14:30||US||Building Permits (January, m/m)||+5.8%|
|14:30||US||Initial Jobless Claims (weekly)||793,000|
|14:30||US||Philly Fed Manufacturing Index (February)||+26.5|
|16:00||EZ||Consumer Sentiment (February)||-15.5|
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