Slump in US and Europe Stocks

Recent losses in the energy sector sparked a dip in stocks for the US and Europe, leaving traders unsure about the movements of the US economy on Monday.

Fractionally shy of 12-year peaks, the dollar index climbed by 0.1 per cent to hit 99.48 by the end of play in New York following its best week since July.

Wall Street anticipated higher earnings to be reported for the first quarter, with big firms publishing results over the next few days. However, with the strong dollar set against falling oil prices and a tentative economic climate at the start of the year, experts have cut profit forecasts considerably.

In contrast to the last three years, the S&P 500 is up just 1.6 per cent in 2015, restrained by the prospect of slow earnings growth and the tightening of the Federal Reserve. Investors will also be concerned about Tuesday’s retail sales figures. Rate strategist at TD Gennadiy Goldberg said: “The key question will be to what extent the weather exacerbated economic slowing in early 2015.”

Central banks’ generosity has heralded a boisterous stock period in Japan and the Eurozone where risk-taking is being encouraged by yield suppression through the buying of bonds. In Japan economic indicators remained flat while the Eurofirst gained just 0.1 per cent as a fall in mining stocks countered strength in banks and oil firms.

Ten-year bond yields hit 0.34 per cent in Japan and 0.15 per cent in Germany, while equivalent maturity US paper eased 1 basis point on the day to 1.93 per cent.