After a second straight weekly increase in the S&P 500, United State’s shares varied in the last day of February. Meanwhile, the People’s Bank of China has increased their resolve to halt the nation’s slowing economy. Michael James, managing director of equity trading at Wedbush Securities Inc., spoke on China’s efforts affecting Wall Street, “Anything that can improve the tone in China will be well-received by the market…Whether this has any meaningful impact on potential growth stimulation remains to be seen, but from a sentiment standpoint it should be a net positive for today’s trade. Equity markets have been trading off the sentiment in oil, and if any of these growth stimulation attempts from China help oil, that will help U.S. stocks.”
As a result of the Chinese central bank lowering the reserve requirement ratio, share futures as well as crude oil futures were able to expunge previously seen losses. Indications of tightening inflation levels have increased rumors that the Federal Reserve will raise interest rates as soon as March, which led to the S&P 500 faltering on Friday. However, due to the strong performance of bank equities, the index remains on pace for a monthly gain of nearly 0.4% which would be the largest monthly increase in three months.
Stock markets in Asia have slid following a meeting of G-20 finance ministers in Shanghai, in which they were not able to create any resolutions to stabilize the international economy. Stewart Richardson, CIO at RMG Wealth Management, spoke on the disappointment of the G-20’s inaction, “Some people were hoping for some of big, bold action from the G-20 to try and kick-start the global economy and now they’re probably disappointed looking at the outcome…The market is probably vulnerable as we go into March.”
Domestically, investor’s have increased their wagers on the Federal Reserve raising interest rates this year. According to the market, the chances of the Fed increasing the interest rate in June are now at 38%, when they were as low as 27% last week. In addition, the likelihood of rates going up in December is now at nearly 56%, despite it being as low as 11% earlier this month.