Financial and Economic Brief - Feb. 14, 2017by © Liberty Publishing, Inc.
U.S Import Prices RiseAccording to the Labor Department, U.S. import prices increased 0.4% in January and 0.5% in December. Import prices are growing as global demand raises prices for oil and other commodities. Furthermore, a more comprehensive increase in inflation is being held back by the strength of the U.S. dollar. The dollar gained 4.4% against the currencies of the United States' chief trading partners in 2016. Prices for imported fuels increased 5.8% last month, however import prices excluding fuels fell 0.2%. Prices for imported capital goods fell 0.1% and the cost of imported automobiles fell 0.5%.
OPEC Production Cuts a SuccessThe International Energy Agency (IEA) reported on Friday that OPEC achieved 90% on its share of production cuts in January totaling 1.8 million barrels per day. After the report, the price of U.S. crude oil futures rose 1% to $53.50 a barrel. “This first cut is certainly one of the deepest in the history of OPEC output cut initiatives,” the IEA said in its report. The production cuts were intended to “support prices and ease the budget pressure” being felt by major producers. While the cuts are working, higher prices are motivating investment and production elsewhere.
World Stocks Rise
World stocks and bond yields rose today, lifted by investors who are betting that President Trump’s tax reform plans will help economic growth and corporate profits. Wall Street closed at record highs on Friday, Asian stocks rallied to peaks, and pan-European stocks hit its highest since late 2015. “Trump-based reflation pricing remains the major driver in the U.S. stock markets, and thirsty investors are waiting for more details on Trump's corporate tax cut plans,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group. The STOXX 600, Europe's leading index of top 600 shares, rose 0.6 percent to 369.51 points, the highest in over a year. Mining and basic resources sectors were among the leaders.
Germany's DAX was up 0.9 percent, led by a 15 percent rise in drugmaker Stada after the company said it had received two offers for the acquisition of the company, one of which is private equity group Cinven Partners LLP.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.5 percent, while Japan's Nikkei rose 0.4 percent.
U.S. futures pointed to a higher open on Wall Street. The S&P 500, Dow Jones Industrials and Nasdaq Composite all posted record closing highs on Friday.