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Prospects Daily: U.S. equities rise to record high on Monday, German business confidence highest since July 2011, Brazil’s consumer confidence lowest since May 2009

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Financial Markets…U.S. stocks rallied on Monday, with the S&P 500 index rising to a record high, as investors speculated the world biggest economy can withstand the normalization of Fed’s monetary policy. The U.S. stock rally shrugged off worries over a cooling property market in China. The S&P 500 gained as much as 0.9% to an all-time high of 1,852, surpassing a previous high of 1,848.38 reached on January 15, and the Dow Jones industrial average was also up 0.9% in morning trade. The S&P index has bounced back 5.4% from its low on February 3.

Ukraine’s bond and stocks markets surged as the country’s new leaders looked to secure international aid amid default concern. The yield on the nation’s dollar bonds due in 2023 dropped 103 basis points to 9.16%, benefiting from the momentum for financial aid as Europe, the U.S. and the International Monetary Fund said they are prepared to offer aid. The country’s benchmark stock index surged 12%, the most gain since May 2010, even as Ukraine’s interim government said the nation needs $35 billion of aid to avert sovereign default.

High Income Economies…The Markit U.S. services sector PMI plunged to 52.7 in February, down from a four-month high of 56.7 in January. The latest ‘flash’ reading was the lowest since last October. However, the robust increase in new business volumes plus continued job hiring suggests that underlying demand remains resilient, and weaker activity growth reflected temporary weather disruptions.

As improved sentiment regarding the current situation more than offset declining expectations, German business confidence strengthened unexpectedly from 110.6 in January to climb to 111.3 in February, the highest since July 2011. This fourth consecutive rise in confidence could indicate that the economic recovery has continued to pick up momentum in the early months of 2014. The current conditions index improved more-than-expected to 114.4 from 112.4 in January, while the expectations index fell to 108.3 from 108.9 in January.

Industrial production for Taiwan, China declined less-than-expected in January, as decreases in manufacturing and energy output was offset by an increase in building construction and mining & quarrying. Industrial production shrunk 1.7% (m/m sa) in January, following December's 2.1% gain, revised from 2.3%. On a three-monthly annualized basis, industrial production grew by 11.0% (3m/3m saar), following a 10.1% gain in December.

Developing Economies…Europe and Central Asia: capacity utilization in Turkey’s manufacturing sector decreased for the second consecutive month to a low of 73.3% in February from 73.9% in January. Capacity utilization was at its lowest in March 2012, when it was recorded at 72.7%.

Meanwhile, after declining in the four previous months, Turkey’s industrial confidence index rose in February, climbing to 104.6 from 101.4 in January. This was the strongest reading of the index since October 2013

Latin America and the Caribbean: Brazil’s consumer confidence index fell for the third consecutive month in February, dropping to 107.1 from 108.9 in January, its lowest level since May 2009 when it was 103.6. Driving this decline, the current conditions index, which reflects households’ poor assessment of the current situation, fell to 112.3 in February from 115.6 in January, its lowest level since July 2013 when it was 110.3; and the expectations index declined to 104.5 from 105.6 in January.

Peru’s GDP growth accelerated in the fourth quarter of 2013 to an annualized pace of 5.2%, up from Q3's revised 4.5% (y/y) growth. Supporting this rapid growth, gross fixed capital formation grew 4.5% (y/y) up from 1.4% (y/y) in Q3; while private consumption and government consumption growth slowed to 4.2% (y/y) and 5.6% (y/y), respectively, from 5.3% (y/y) and 7.0% (y/y) respectively in Q3. Quarter-on-quarter, GDP growth accelerated to a seasonally adjusted 1.8%, its fastest pace in the last five quarters. For the year 2013 as a whole, GDP grew 5.0%.