The US stock market had another good day with the DJIA up over 200 points and the S&P 500 index more than 20 points higher as worries over a possible escalation of the Syrian missile crisis seemed to quickly fade. After a higher open for index futures, the mood in Asia had been one of some caution but as neither index broke below Friday’s closing levels, so the early gains were progressively extended into the North American afternoon. Whilst the stock market did quite well, however, the US Dollar went into reverse. From an opening level around 89.40, the dollar index slipped steadily lower and at one point fell on to an 88 ‘big figure’ for the first time in over two weeks before rallying very marginally to close at 89.00.
In economic data, the US Empire manufacturing survey saw the business conditions index slide to 15.8 in April from 22.5 in March. The new orders index fell to 9.0 from 16.8, while the shipments index declined to 17.5 from 27.0, and unfilled orders decreased to 3.7 from 12.7. Looking six months into the future, the general business conditions index plunged to 18.3 from 44.1 last month whilst the new orders index decreased to 18.5 from 43.0. Separate data showed U.S. retail sales rebounded in March after three straight monthly declines as households boosted purchases of motor vehicles and other big-ticket items. The Commerce Department said retail sales increased 0.6% last month after an unrevised 0.1% drop in February. Excluding automobiles, gasoline, building materials and food services, the so-called core retail sales - which correspond most closely with the consumer spending component of gross domestic product - rose 0.4% last month after being unchanged in February.
Kicking off a busy week of Fed speakers, Federal Reserve Bank of New York President William Dudley popped up on CNBC to say the central bank will stay on its gradual path of raising interest rates unless inflation moves up by an appreciable margin. “I don’t think we know exactly how many more rate hikes we are going to do this year… As long as inflation is relatively low, the Fed is going to be gradual. Now, if inflation were to go above 2 percent by an appreciable margin, then I think the gradual path might have to be altered.” The USD index opens in Asia this morning at 89.00.