Logo Background RSS

Advertisement

Stock Indices Rise On Data, Easing Geopolitical Tensions

  • Written by Syndicated Publisher No Comments Comments
    August 20, 2014

    An ideal combination of positive economic data along with relatively stable inflation figures helped lift stock markets on Tuesday. Data pointed to an acceleration in housing market activity against a backdrop of stable price pressure, signalling the potential for an ideal mix of strong growth and an extended period of loose monetary policy. Benchmark equity indices rose, while commodities such as gold and oil were sold off.

    After a tepid first half of the year, the US housing market appears to be on the upswing once again. Figures yesterday from the National Association of Home Builders (NAHB) pointed to increasing confidence among firms in that sector. The benchmark index rose two points to 55 (Consensus: 53), marking its third consecutive monthly gain. It has now recovered January high. Positive sentiment appears to be feeding through to activity.

    Housing starts rose by 15.7% (Consensus: 8.1%) to 1.093 million in July after a 4.0% decline in June, pointing to bullish sentiment in the sector. This optimism looks set to support activity later in the year. The number of building permits issued rose 8.1% (Consensus: 2.8%) after a 3.2% decline in June, reaching an annualized 1.052 million figure. Despite sustained recovery in recent years, both numbers remain well below their pre-recession peak and around 25% off their historical average.

    Figure 1: US housing starts rise in July

    (Source: St Louis Fred)

     

    There was little sign that a more rapid rate of growth is set to translate into increased price pressure. July Consumer Price Inflation (CPI) data was as expected: a muted 0.1% on the month and 2.0% over the past twelve. A 0.4% increase in food prices was largely offset by a 0.3% drop in energy prices. The 0.1% gain was the smallest monthly rise since February. Excluding food and energy, consumer prices increased 1.9% over the past year, which was also in-line with market expectations.

    Fresh data, along with easing geopolitical fears, helped to support equity markets. The Dow Jones Industrial Average continued its positive run from yesterday. By 10:30am in New York, the benchmark index was up close to a third of one percentage point to 16,890.29. The S&P 500 was up by a similar percentage to 1976.60. Both have performed well over the past week, as they attempt to recover ground lost during poor trading at the end of July and beginning of August. In a further sign of bullishness, the tech-heavy NASDAQ index rose to its highest level since March 2000.

    A boon for equities proved to be a bane to gold and oil. Brent Crude for October delivery was down 0.3% to $101.34 in mid-morning trading, following a near-2% decline the day before on the back of easing geopolitical tensions in Iraq and Ukraine. These factors also put pressure on the price of precious metals. Gold faded. BY 10:30 EDT it had fallen below $1300 to around $1296. It was a similar story for silver, which declined slightly to around $19.44.

    Nadex, a US binary options exchange, offers a variety of financial markets to trade including global stock indices and key commodities such as gold and oil. All have a variety of strike prices and settlement dates to suit the particular needs of individual traders. There are on-going complimentary webinars to help new members learn binary options trading.

    Futures, options and swaps trading involves risk and may not be appropriate for all investors.

    Images: via Flickr (licence attribution)

    About The Author

    Nadex is a Chicago-based derivatives exchange designed for the retail trader.

    We list innovative capped-risk derivatives contracts on a wide range of global financial markets.

    • Subject to regulatory oversight by the CFTC
    • A U.S. exchange designed primarily for retail traders
    • A regulated exchange that lists only limited risk products
    • Part of IG Group, a global financial services provider with a market cap of over £2.2bn (Oct. 2013)

     

    NADEX NEWS

    Keep up-to-date with the latest news and information on our range of trading products and services.

    Learn more

    CONTACT US

    We’re always happy to answer any questions you may have. Feel free to get in touch by phone, mail or email.

    Contact Us

    MEET THE TEAM

    Nadex is backed by more than 100 years of combined financial, technological and regulatory experience.

    Meet the Team

     

Advertisement

Closed Comments are currently closed.