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DAILY MARKET REVIEW: 23 FEBRUARY 2015

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Daily Market Review on STOCK.com

DAILY MARKET REVIEW: 23 FEBRUARY 2015

Feb 23 2015, 08.11am GMT

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STOCK.com   Indices

With news that ministers in the euro zone had agreed to a 4-month extension of the bailout in Greece, U.S. stocks rallied on Friday. To top it off, the Dow Jones Industrial Average (DJIA) and the S&P 500 index (SPX) reached record levels marking weekly gains for the 3rd consecutive week. Closing at a record high for the first time in 2015, the DJIA advanced 0.9 percent, or 154.67 points, to 18,140.44, marking a 0.7 percent gain for the blue-chip index on the week. Also on the upside was the SPX which gained 0.6 percent or 12.85 points, at 2,110.30. Over the week, the S&P 500 index gained 0.6 percent. Rising for the 8th consecutive trading session, the Nasdaq Composite index (COMP) climbed 0.6 percent, or 31.27 points, to 4,952. This tech heavy index has gained 1.3 percent over the week and has also outperformed the other main indices by gaining 4.6 percent already this year.

STOCK.com   Currencies

In currency trading on Friday, the euro (EUR) traded higher against the U.S. dollar (USD). This came in response to an agreement that was finally reached between Greek officials and the Eurogroup to keep the Greek government funded during the 4-month extension of the country’s bailout. Despite this increase in the euro on Friday, the currency was still lower 0.1 percent for the week. On Thursday, the EUR/USD traded at $1.1369 yet on Friday, the euro advanced and was trading at $1.1377, off a session high of $1.1430. The recent agreement states that Greece needs to submit a list of proposed reforms to its lenders by Monday which include the International Monetary Fund, the European Central Bank as well as the European Commission. If Greece fails to act accordingly, the country has only until the end of February when its €240 billion bailout will expire. The fear however is that the Greek government is at risk of running out of money before this date which could force the country to exit the euro zone. In other currency news, ICE U.S. Dollar Index finished at 94.3490, down 0.05 percent and marking a decline for the fourth week in a row.

STOCK.com   Stocks

If you were considering investing in Russian stocks or currency, you might need to think again. On Friday last week, Moody's Investors Service downgraded the country’s sovereign debt rating into junk status. This downgrade came as a result of the steep decline in oil prices recently, the weakening Russian ruble (RUB) as well as the continuing crisis in the Ukraine despite the so called ceasefire agreement which was recently signed between the countries. The Russian sovereign debt rating was downgraded from Baa3 to Ba1. This now places it one step below investment grade. Additionally, the outlook rating is also negative and this means that another downgrade by Moody's can be expected in the near future. In their statement, Moody’s explained that due to the decline of the country’s foreign exchange reserves due to Russia’s restricted access to international capital markets as well as continued capital outflows, the Russian government's ‘financial strength will diminish materially’. Furthermore, with the ongoing military conflict in Ukraine and the international response to this conflict, Russian authorities might be placed in a difficult situation when it comes to ‘timely payments on their external debt service’.

STOCK.com   Commodities

In Asian trading on Monday, crude oil prices declined as most of the region returned from the Lunar New Year holiday. At 0100 GMT, benchmark Brent crude futures were trading down 10 cents at $60.07 a barrel. Also on the downside were the U.S. contracts and WTI crude oil traded at $50.61 a barrel, down 20 cents. The American contracts have declined more in the last week as a result of record inventories which has prompted investor concerns regarding a global supply glut despite a decline in the oil rig count. According to some analysts such as BNP Paribas, the decline in rig count will translate into a lower output which will enable U.S. oil prices to recover later this year.

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