It’s been a volatile day on Wall Street, with the S&P 500 powering as high as 1847.5 earlier in the session before dropping back. By early afternoon, the S&P was down 0.22% at 1836.8 and the Dow Jones had also lost ground after earlier gains, dropping 0.17% to 16,103.
A report by the IMF compiled in readiness for the next G20 meeting warns of risks to global economic growth including the recent slides in emerging-market currencies and possible delation in Europe.
‘Capital outflows, higher interest rates, and sharp currency depreciation in emerging economies remain a key concern,’ the report says, describing the global recovery as ‘disappointing’. The report added that ‘A new risk stems from very low inflation in the euro area, where long-term inflation expectations might drift down, raising deflation risks in the event of a serious adverse shock to activity.’
Following on from yesterday’s sharp drop in the NAHB housing market index, there were further indications of weakness in the US housing market today with news of a decline in housing starts in January. Starts fell to a seasonally-adjusted, annualised rate of 880,000 in January, down from an upwardly-revised 1.048 million in December. Once again, extreme weather conditions are being blamed for the fall which, if true, could mean a bounce back come spring time. Existing home sales will be released on Friday.
The minutes from the FOMC meeting at the end of last month are released at 7pm GMT and should give more detail into the decision-making process of the committee in deciding to scale back the central bank’s monthly asset purchases by a further $10 billion.