The new year began with more of the same. The risk trade was back in vogue as investors crowded into all things risky. The dollar declined on the day and equities rallied 1.6%. Volume was unusually light for the day as investors appeared somewhat hesitant to jump on the back of the rally that started well into last evening. Breadth was firmly positive. Daily Futures wraps up the action from all markets:
U.S. Economy
The Institute of Supply Management said that its index of U.S. manufacturing increased from 53.6 to 55.9 in December, stronger than expected and the highest reading in almost four years. The March 2011 eurodollars closed up .11 at 98.18.
The U.S. Census Bureau said that construction spending was at an annual rate of $900.1 billion in November, down .6% from October’s pace. In the first eleven months of 2009, construction spending is down 12.7% from a year ago.
Grains and Cotton
March corn was up 4 cents at $4.185 after this weekend’s bitter cold temperatures made it less likely that this year’s corn harvest will ever be completed.
The USDA said that last week’s export inspections of:
Corn totaled 20.3 million bushels, down 15% from a year ago.
Soybeans totaled 32.2 million bushels, up 9% from a year ago.
Wheat totaled 9.1 million bushels, down 31% from a year ago.
March wheat closed up 16.25 cents at $5.577 in spite of the low export inspections.
Livestock
February cattle fell .80 to 85.37 in spite of extremely cold temperatures slowing weight gain in the north-central U.S. February hogs were up .25 at 65.85.
Coffee
March coffee jumped up 5.90 cents to $1.4185, helped by cold U.S. weather and expectations for a reduction in coffee supplies in 2009-2010.
Sugar
March sugar closed up .67 at a new contract high of 27.62, boosted ongoing tight world supplies and today’s weaker dollar.
Orange juice
The weather forecast turned colder since the markets closed on Thursday. According to Weather.com, temperatures in central Florida have a chance to go below freezing on four out of five nights this week. March orange juice closed up 4.50 cents at $1.3355.
Energies
2010 started off colder than forecasters expected. The 6 to 10 day forecast from the National Weather Service is calling for below average temperatures in the eastern third of the U.S. March natural gas gained 30.9 cents to $5.841. March heating oil jumped up 7.07 cents to $2.1926.
Metals
An index of manufacturing in China increased from 55.7 to 56.1 in December, the highest in five years. Also, workers went on strike today at the Chuquicamata mine in Chile. March copper finished up 5.95 cents at $3.4060.
February gold closed up $22.10 at $1,118.30, taking advantage of today’s weaker dollar.
Currencies
In the U.K., the CIPS/Markit purchasing managers’ index increased from 51.8 to 54.1 in December, the highest in over two years. The March British pound ended down .0061 at $1.6085.
An index of manufacturing for the Euro area from Markit Economics increased from 51.2 to 51.6 in December, the highest in 21 months. The March euro closed up .0076 at $1.4410.
An index of manufacturing in Australia fell from 51.2 to 48.5 in December, a sign of contraction.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.