- Dow Jones reaches new all-time high on more strong US data
- Australian GDP stronger than expected in Q4
- Focus turns to ECB meeting tomorrow
Risk sentiment yesterday made a push higher following even stronger US data
. ISM non-manufacturing was stronger than expected and pointed to continued robust growth in the service sector in February. As the service sector and consumption are closely linked, this was very positive news as it dampens fears of a short-term slowdown following the tax hikes and higher gasoline prices. The ISM report also pointed to strong employment in the service sector which suggests the non-farm payrolls report on Friday could be strong as well.
In equity markets, the Dow Jones was the talk of the day as it pushed to a new all-time high early in the day and hung on to those gains throughout the session.
Asian stock markets are also performing very well, in particular the Nikkei which is up close to 2% and reached its highest level since 2008.
The move in the bond market is more moderate. US bond yields rose 3bp to 1.90% where it has stayed overnight. Spanish and Italian bonds saw further spread tightening yesterday.
In FX markets, the EUR/USD continued to push higher on better risk sentiment. EUR/SEK fell again yesterday, but is unchanged in overnight trading. Australian GDP beat expectations rising 0.6% q/q in Q4 from an upward revised growth in Q3 of 0.7% q/q (revised from 0.5% q/q). The data underpinned a strengthening of the AUD.
With limited data out today focus increasingly turns to the ECB meeting tomorrow, where the market will look for a dovish ECB following weak activity data outside Germany and lower-than-expected inflation.
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