US stocks were down slightly on the last trading day of February as mixed economic data made investors cautious, while European shares broke multi-year records ahead of the European Central Bank’s planned injection of €60 billion to spur growth.
The FTSEurofirst 300 index of top European shares closed up 0.38 per cent yesterday after reaching its highest level since November, 2007. It has surged over 14 per cent this year, its strongest start since benchmarks were created in 1986.
On Wall Street, the Dow Jones industrial average was down 30.50 points, or 0.17 per cent, at 18,183.92. The Standard & Poor’s 500 Index was down 1.10 points, or 0.05 per cent, at 2,109.64. The Nasdaq Composite Index was down 15.52 points, or 0.31 per cent, at 4,972.37.
US gross domestic product expanded 2.2 per cent in the fourth quarter, revised down from 2.6 per cent estimated last month, the Commerce Department said. The number barely beat economists’ forecasts of 2.1 per cent growth but slowed from a five per cent rate in the third quarter.
Pending home sales rose to their highest level in one-and-a-half years in January and the University of Michigan’s final February reading on consumer sentiment slipped from an 11-year high but topped expectations.
Investors in Europe have bought more higher-yielding assets, such as equities, as yields on core European government bonds have tumbled into or close to negative territory ahead of the ECB’s quantitative easing programme.
The ECB is expected to give details at its meeting next week on its January 22 decision to embark on a securities-buying program to fend off deflation and revive Europe’s economy.
Data yesterday from some pockets of the eurozone showed inflation prospects, though still subdued, may not be as bad as previously thought. That prompted yields on top-rated government bonds to bounce from record lows.
The dollar fell slightly but trimmed early losses against the euro and yen after the US GDP number, which supported the view the world’s biggest economy will grow at a moderate pace.
The dollar index was still on track for its eighth straight month of gains against a basket of major currencies, which would be its longest streak of monthly gains since the currency’s link to gold was dropped in 1971.
US Treasuries prices were mostly flat after the mixed US economic data created uncertainty over the Federal Reserve’s timeline for hiking interest rates.
After settling down sharply on Thursday, crude oil futures rebounded. Brent was up 3.1 per cent at $61.92 and US crude was up 2.1 per cent at $49.20, with both headed for their first monthly gain since June 2014, helped by an improving demand outlook and supply outages.