Market Update & Important Indicators:
Investors scooped up stocks on fresh optimism about the U.S. economy. The Dow Jones Industrial Average intraday climbed toward its sixth record of the year on gains in bank shares. The moves came after Federal Reserve Chairwoman Janet Yellen signalled the central bank could consider raising short-term interest rates at its next policy meeting in March, citing recent job gains and rising inflation. Earlier in the day, government data showed that the U.S. producer-price index rose in January at the quickest rate in more than four years, another sign of higher inflation. Some investors and analysts caution that a more aggressive approach from the Fed could derail the stock rally that has taken indexes to records multiple times this year. Still, others say continuing growth in the U.S. economy should support stocks. Investors have also been expecting tax cuts, fiscal stimulus and looser regulations under President Donald Trump to stoke growth. The Dow industrials intraday was up 64 points, or 0.3%, to 20476, led by gains in the banking sector.
European stock markets struggled to extend its winning run, closing only marginally higher after disappointing economic growth from Germany and the Eurozone. The Stoxx Europe 600 index ended up 0.07 point at 370.20, enough to keep it at the highest level since December 2015. The small gain also marked a sixth straight day of advances for the pan-European benchmark. The subdued trading activity came as investors digested the latest readings on economic growth for Germany and the Eurozone, which both came in weaker than expected. Gross domestic product for Germany expanded by 1.7% in the fourth-quarter, falling short of a 1.8% forecast, while Eurozone GDP growth was cut to 0.4% from 0.5%. Germany's DAX 30 index ended near break-even levels at 11,771.81, off 2.62 points, but enough to halt a three-session climb.
Most Asian stock markets were little changed ahead of Federal Reserve Chairwoman Janet Yellen's testimony before Congress. Investors were also parsing a string of economic data on Tuesday that could influence policy makers' rate setting agenda in the months ahead. The Nikkei Stock Average fell 1.1% as the yen strengthened against the dollar. Stocks in Hong Kong and Shanghai were flat. China's consumer price inflation climbed to a 2 1/2 -year high on stronger food prices ahead of the Lunar New Year, official data showed, raising expectations for the PBOC to tighten policy. Tokyo stocks opened higher but soon erased all its gains as initial enthusiasm for smoother U.S.-Japan trade relations following the summit meeting waned.
Australian shares wilted, snapping a five-session run higher as the major banks pared recent gains and corporate earnings sparked selling in some stocks. After initially building on the previous day's rise to a fresh four-week high, the market ran out of steam in the afternoon and steadily pulled back, leaving the S&P/ASX 200 down 5.5 points, or 0.1%, at 5755.2. Earnings are set to remain in focus Wednesday, with a raft of results due from companies including Wesfarmers, CSL, Vicinity Centres and Domino's Pizza Enterprises.
On the London Metal Exchange, copper for delivery in three months was down 1.63% at $6,004/t. The other base metals were mixed on Tuesday. Aluminium prices rose 0.4% at 1,875/t, whilst nickel prices rose 0.3% at 10,715/t. Lead prices fell 2.9% at 2,349/t, tin prices fell 0.4% at 19,901/t and zinc prices fell 0.7% at 2,904/t.
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