NEW YORK: Stock markets around the world rallied on Tuesday, helped by solid corporate earnings reports and higher oil prices supporting energy shares, while the yen again retreated sharply against the dollar.
MSCI’s broad gauge of global stocks climbed 1 percent, on track for its best session in three weeks. The three major U.S. indexes surged at least 1 percent and the pan-European FTSEurofirst 300 index advanced 0.9 percent.
The yen fell against the dollar for a second day as a Japanese economic adviser reiterated that the country was prepared to intervene in currency markets.
Against a basket of currencies, the dollar edged up 0.2 percent.
Equities globally benefited from investors’ belief that the U.S. Federal Reserve is less likely to raise interest rates in June in light of recent weaker-than-expected economic data, said Peter Kenny, senior market strategist at Global Markets Advisory Group in Berkeley Heights, New Jersey.
“Markets are banking on an unchanged interest rate narrative, not only in June but for the foreseeable future, meaning certainly to the end of the summer,” Kenny said.
The Dow Jones industrial average rose 196.69 points, or 1.11 percent, to 17,902.6, the S&P 500 gained 22.83 points, or 1.11 percent, to 2,081.52 and the Nasdaq Composite added 51.12 points, or 1.08 percent, to 4,801.33.
The S&P 500 gained strength from Amazon, following a bullish analyst report, and Allergan, after the U.S. pharmaceutical company posted strong earnings. Results from Credit Suisse and jewelry maker Pandora helped the European index.
Greek shares hit 2016 highs after euro zone finance ministers offered to grant Greece some debt relief, causing Greek 10-year bond yields to fall below 8 percent for the first time since early December.
Brazil’s benchmark Bovespa stock index gained 2.5 percent and the country’s currency jumped with impeachment proceedings against leftist President Dilma Rousseff back on track, fueling optimism that a new pro-market administration could take over on Thursday.
The yen slid 0.9 percent against the dollar as risk appetite improved for a second straight session, undermining traditional safe havens such as the Japanese currency.
“Risk appetite is naturally tied to the belief that we’re in an ultra-low-yield environment and investment managers can’t simply sit here,” said Jeremy Cook, chief economist at payments company World First in London.
Repeated verbal warnings from Japan over the weekend and on Tuesday that it was prepared to step in to weaken the currency have also held off investors.
Oil prices jumped as supply disruptions of 2.5 million barrels per day in Canada and elsewhere offset concerns about growing record high U.S. crude stockpiles.
U.S. crude settled up 2.8 percent at $44.66 a barrel, while benchmark Brent crude settled up 4.3 percent at $45.52 a barrel. Oil prices have recovered some ground after touching 12-year lows earlier in 2016.
Benchmark 10-year Treasury notes gained 2/32 in price to yield 1.7543 percent, down from 1.76 percent on Monday.
Copyright Reuters, 2016
Courtesy : BRecorder