U.S. markets closed mostly higher to continue their run towards all-time highs after the President signed a stopgap funding bill to end the government shutdown.
The Nasdaq showed the most strength after rising 0.7% and trading to an intraday record high of 7,465.
The Russell 2000 was higher by 0.4% after testing a lifetime peak of 1,612 while closing above the 1,600 level for the second-straight session.
The S&P 500 kissed an all-time high of 2,842 after adding 0.2% for the session. Meanwhile, the Dow fell 3 points, or 0.01% after trading to an intraday and lifetime high of 26,246.
Real Estate and Utilities were sector standouts after rallying 1.5% and 1%. Health Care and Consumer Staples were slightly weak with the sectors falling 0.5% and 0.3%, respectively.
Global Economy- European markets were mixed with Germany’s DAX 30 rising 0.7% to close at a record high while UK’s FTSE 100 and the Stoxx Europe 600 added 0.2%. The Belgium20 fell 0.4% and France’s CAC 40 slipped 0.1%.
The German January ZEW survey expectations of economic growth rose 3 to an 8-month high of 20.4, stronger than forecasts for a rise of 0.3 to 17.7.
The IMF raised its global GDP growth forecast to 3.9% in both 2018 and 2019, due in large part to the U.S. tax bill.
Asian markets showed strong gains with Japan’s Nikkei surging 1.3% to close above 24,000 for the first time since November 1991. Hong Kong’s Hang Seng jumped 1.6% and South Korea’s Kospi rallied 1.4% to close at its best level since October.
China’s Shanghai soared 1.3% while Australia’s S&P/ASX 200 advanced 0.7%.
The Bank of Japan voted 8-1 to keep its interest rates and asset purchases at current levels.
The BOJ also kept its price and economic forecasts unchanged with Governor Kuroda saying they must maintain their current monetary easing program as inflation is still distant from its 2% target and price risks remain skewed to the downside.
Redbook Store Sales were up 3.8% for the year in the week ending January 20th.
The Richmond Fed Manufacturing Index slumped 6 points to a reading of 14 in January after falling 10 points to 20 in December. Expectations were for a print of 18.
Market Sentiment- Fed board nominee, Marvin Goodfriend, said the Fed was on the right path to get to a 2% inflation rate in a year or so in his testimony before the Senate Banking Committee.
He doesn’t believe that a third round of bond purchases will be required, and doesn’t view any bank as too big to fail, nor does he believe the government needs to guarantee 30-year mortgages.
Goodfriend went on to say that he is supportive of the Fed’s dual mandate of stable prices and full employment, though he believes Fed transparency could be improved.
The iShares 20+ Year Treasury Bond ETF (TLT) closed up for the second-straight session after trading to an intraday high of $124.19.
Upper resistance at $123.50-$123.75 and the 200-day moving average held with a close above the latter being a slightly bullish development. Support is at $123-$122.75.
Market Analysis- The Russell 2000 ETF (IWM) traded to an all-time high of $160.30 with fresh resistance at $160-$161.50 holding. Rising support is at $158.50-$158 with a close below the latter being a slightly bearish development and signaling a possible short-term top.
RSI is approaching January and November resistance at 70 with continued closes above this level being a bullish development. A close back below 65-60 would likely signal a short-term top.
The Spider Gold Shares (GLD) traded up $127.35 and is testing September resistance at $127.50-$128. A close above the latter could lead to a run towards $129.50-$130.
Rising support is at $126.50-$126.
RSI is in a slight uptrend but is facing January and early September resistance at 70-75. Continued closes above the latter would be a bullish signal.
Support is at 65 with a move below 60 being a warning signal.
All the best,
Roger Scott