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Ukraine Peace Accord Drives Global Rally


Today's financial recap and tomorrow's financial outlook.

US economic data disappointed today, but markets rallied hard on a peace accord between Ukraine and Russian separtists.

Following a meeting in Minsk, Ukraine, Russia, Germany, and France announced a peace agreement to end the fighting in Ukraine. A ceasefire between Ukraine and Russian separatists will begin Sunday, and foreign troops and military resources will be withdrawn from Ukraine.

In addition, the IMF offered Ukraine a $40 billion aid package to help stabilize its economy.

The news sent global equity markets higher.

The Eurogroup meeting on Greece also kicked off and as expected, no resolution was reached. However, Greece's Finance Minister Yanis Varoufakis called the talks "constructive", and German Chancellor Angela Merkel said "Germany is prepared to compromise."

In turn, Greek stocks and bonds both staged impressive rallies.

Sweden announced it cut its key repo rate to -0.1% from zero and it would launch a bond buying program. That send the Swedish krona down against the euro and US dollar, while Swedish equities rose.

In the US, January retail sales fell 0.8% vs. the 0.4% drop economists expected. Excluding autos and gasoline, sales rose 0.2%, missing the consensus forecast of 0.4%.

Initial jobless claims also disappointed at 304,000, which was above the 287,000 expected. Continuing claims were 2.354 million, which was slightly below Wall Street's outlook.

Those reports, which came out at 8:30 a.m. ET, put a small dent in the pre-market US futures rally, but it didn't last long as the S&P 500 quickly powered up to approach all-time highs.

The tech sector led the way as market leader Apple (AAPL) made yet another all-time high. Additionally, Cisco Systems (CSCO) reported strong earnings after the close Thursday, which sent it up 9.4%.

Internet security stocks also had a very strong day off FireEye's (FEYE) impressive earnings report.

Energy stocks performed well as crude oil rose over 4%, boosted by the US dollar's slide.

In the loss column, Tesla Motors (TSLA) and Baidu (BIDU) took heavy losses from their underwhelming earnings reports.

And credit card giant American Express (AXP) fell 5.5% to $80.48 after said it would end its merchant agreement with retailer CostCo (COST) on March 31, 2016.

The S&P 500 finished Thursday at 2088.48, up 1.0%, a new high for the year, and within striking distance of the all-time high of 2093.55 set on December 29.

Tomorrow's Financial Outlook

Ukraine and Greece-related headlines should continue to bounce markets around tomorrow as we hover around all-time highs.

Overseas, we will see GDP numbers from France, Germany, Italy, and the Eurozone.

The domestic economic calendar is fairly light with the January Import Price Index at 8:30 a.m. ET, followed by January University of Michigan Sentiment at 10:00 a.m.

The Baker Hughes US Rig Count will be released at 1:00 p.m. ET. Judging by recent trends, it could very well drive crude oil action tomorrow afternoon.

There are no major US companies reporting earnings.

Twitter: @Minyanville

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