By Joyce Yu
Philadelphia, PA–Following reaching record highs on Friday driven by a strong rally in the technology sector, global equity markets were rather muted Monday morning as investment enthusiasm subsided. U.S. stocks opened lower, European markets were down in early trading and Asian markets ended mixed.
The Dow Jones industrial average gained 0.2% on Friday, while the S&P 500 added 0.8%. The Nasdaq soared 2.2% on a banner day for tech earnings.
“There is an avalanche of things that are happening or going to happen, but markets are just shrugging it off. It’s like markets have been vaccinated against bad news thanks to the strength of the global business cycle,” said Marie Owens Thomsen, global head of economic research at Indosuez Wealth Management in Geneva.
Data released this morning showed the U.S. consumer spending growth at the fastest pace in more than eight years in September, likely as households in Texas and Florida replaced flood-damaged motor vehicles.
The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 1.0% last month. The increase, which also included a boost from higher household spending on utilities, was the largest since August 2009.
Spending on long-lasting goods like autos surged 3.2% last month. Outlays on services rose 0.5%. Personal income rose 0.4% after expanding 0.2 % in August and wages advanced 0.4%. Savings, on the other hand, fell to $441.9 billion in September, the lowest level since August 2008.
Personal consumption expenditures price index excluding food and energy, a preferred inflation measure by the Fed, edged up 0.1 % in September. The index has now increased by 0.1% for five straight months.
The soft core PCE readings are likely to intensify the inflation debate among Fed officials, who are holding a policy meeting on Tuesday and Wednesday. The U.S. central bank is not likely to raise interest in this meeting. Besides the Fed, policy makers elsewhere will also meet this week including the Bank of Japan first up on Tuesday, and the Bank of England on Thursday. Of those, only the Bank of England is expected to hike this time round.
In the political sphere, Spanish Prime Minister Mariano Rajoy sacked Catalonia’s president and dissolved its parliament on Friday after lawmakers in the autonomous region voted to declare independence. Future development remains unclear, but is likely to bring in more volatility.
