NEW YORK: World stock markets rose to near five-year highs on Tuesday, boosted by views that China was moving to support its cooling economy, while the dollar fell to one-month lows. Major US equity indexes ended little changed, with the Dow rising and Nasdaq falling after a mixed batch of earnings, including from chemical maker DuPont and insurer Travellers.
The Standard & Poor’s 500 index snapped a four-day winning streak. It earlier set an intraday record high and came within 2 points of its milestone of 1,700 before turning lower. The Dow also reached an intraday record high.
Copper prices rebounded from early losses after China’s president, Xi Jinping, in remarks published on Tuesday, emphasized the government’s determination to restructure the country’s slowing economy. Yields on low-risk US and German government debt rose as higher equity prices reduced their safe-haven appeal.
Oil prices also rose on optimism on China, as did shares of mining companies. Local media in China reported the government was looking to increase investment in railroad projects to help relieve a capacity glut in steel, cement and other construction projects.
“Managing to keep (Chinese growth) above 7 percent will certainly be viewed as a positive stance,” said IG Markets analyst Alastair McCaig in London.
The MSCI world equity index, which tracks stocks in 45 countries, climbed 0.1 percent to 376.02, close to the five-year high set in May. The Dow Jones industrial average ended up 22.19 points, or 0.14 percent, at 15,567.74. The Standard & Poor’s 500 Index closed down 3.14 points, or 0.19 percent, at 1,692.39. The Nasdaq Composite Index finished down 21.11 points, or 0.59 percent, at 3,579.27.
After the closing bell, Apple Inc. said its third- quarter results came in stronger-than-forecast at $7.47 a share, lifting the stock of the iPhone and iPad maker by 4.5 percent. Before the results, Apple shares closed down 1.7 percent at $418.99. In Asia, an upgraded economic outlook from Japan’s government lifted Tokyo’s Nikkei stock index 0.82 percent to 14,778.51.
The dollar fell to one-month lows against a basket of currencies as an early bounce faded.
Investors earlier bet that the currency recently had declined too far, too fast despite the debate about when the Federal Reserve would begin to slow its stimulus measures. Fed Chairman Ben Bernanke’s dovish remarks have emphasized that the US central bank’s bond buying will continue in some form and interest rates will likely remain low for the foreseeable future.
Heightened expectations that Japan’s government will stick to expansionary policies after weekend elections weakened the dollar against the yen on Monday. The victory in parliament’s upper house election on Sunday cemented Prime Minister Shinzo Abe’s hold on power and gave him a stronger mandate for his programs to stimulate the world’s third-biggest economy.
An early rise in US 10-year Treasury note yields above the 2.50 percent level ahead of this week’s $99 billion in coupon-bearing supply briefly propped up the dollar. The benchmark 10-year U.S. Treasury note was down 8/32 in price with a yield of 2.514 percent, up 3.0 basis points on the day.
The German 10-year Bund yield, meanwhile, was 1.552 percent, little changed from Monday’s close.
The dollar index fell 0.3 percent to 81.971. The greenback was 0.12 percent weaker against the yen at 99.50 yen after briefly trading back above the 100 yen level, while it was down 0.4 percent versus the euro at $1.3231.
In the commodities market, Gold rose to a one-month high as speculators bought back bearis bets ahead of an option expiry later this week after the metalrallied further above a technical threshold at $1,300 an ounce breached in the previous session Copper gained 0.27 percent at $7,048 a tonne in London, erasing early losses linked to worries about a supply glut and sluggish global demand.
World oil prices traded mixed yesterday, with New York crude taking a hit from disappointing US data, according to analysts.
Brent North Sea crude for delivery in September gained 30 cents to stand at $108.45 a barrel in late London deals.
New York’s main contract, West Texas Intermediate (WTI) for delivery in September, slipped 22 cents to $106.72 a barrel.
New York crude’s “price decline was triggered by weaker-than-expected existing home sales in the US”, said Kash Kamal, research analyst at Sucden brokerage in London.
“Expectations for a further drawdown in (US)crude stocks this week may support WTI near current levels.”
He added: “Brent remains relatively well supported at current levels as tensions in the Middle East continue to threaten supply, however prices have experienced some downside as concerns over slowing Chinese growth materialised.”
The National Association of Realtors on Monday said that US home sales fell 1.2 percent to an annual rate of 5.08 million in June. The average analyst estimate was for a rise to 5.28 million in June.
Reuters
