This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
The flow of news today has been fairly encouraging, but it hasn’t been quite enough to fully staunch the wounds inflicted on the US stock market last week by fears over China’s outlook and weakness in emerging markets.
Housing has been a bright spot for the US economy for a couple of year now, but new homes sales seem to have been adversely affected by bad weather conditions at the tail end of last year, with December sales falling to an annualised rate of 414,000 from a downwardly-revised rate of 445,000 in November. This was below expectations, with higher house prices no doubt having played a part in slowing sales.
More promising was the latest regional survey from the Dallas Fed, which # shows activity in the manufacturing sector expanding again this month, the ninth consecutive increase in growth. The Dallas Fed manufacturing survey rose to 3.8 in January from the 3.1 seen in December, while the survey’s production index rose to 7.1 and the new order component jumped from a December reading of 1.3 to a seventh-month high of 14.4; such signs of strong demand bodes well for output next month.
Earnings have been a little more bullish today. Construction bellwether and Dow component Caterpillar rose 4.7% after announcing better-than-expected quarterly profit . CEO and chairman Doug Oberhelman said he sees ‘signs of improvement in the world economy’ but also added that the company would continue to cut costs this year in response to falling revenue.