Data lifts dollar, sends world stock markets to fresh peaks
NEW YORK (Reuters) – Upbeat data lifted the dollar and sent world shares to a fourth all-time high in less than a month on Thursday, a day after Federal Reserve Chairwoman Janet Yellen signaled that a rise in interest rates would be less aggressive than had been expected.
Oil prices gained as evidence of stronger demand in China offset reports of higher production by key OPEC exporters in a report by the International Energy Agency.
Stocks on Wall Street climbed, ahead of Yellen’s second day of testimony, after her remarks on Wednesday suggested a more gradual tightening of monetary policy than expected, which sparked a rally in global equity markets.
The US economy is healthy enough for the Fed to raise rates and begin winding down its massive bond portfolio, though low inflation may leave the central bank with less leeway, Yellen told a House of Representatives committee on Wednesday.
Sentiment was boosted after China reported upbeat data on exports and imports for June, the latest sign that global trade is finding some traction again.
The data pushed Asian shares up more than 1% and lifted MSCI’s 47-country gauge of global equity markets to a fresh record high with a gain of 0.25%.
The pan-European FTSEurofirst 300 index rose 0.27% to close at a preliminary 1,518.69.
In early afternoon trading, the Dow Jones Industrial Average rose 18.24 points, or 0.08%, to 21,550.38, the S&P 500 gained 2.82 points, or 0.12%, to 2,446.07, and the Nasdaq Composite added 2.29 points, or 0.04%, to 6,263.46.
Encouraging US economic data supported the dollar. The number of Americans filing for unemployment benefits fell last week for the first time in a month, and producer prices unexpectedly rose in June. The data likely will keep the Fed on track for a third interest-rate increase this year.
Yellen returned to Capitol Hill on Thursday to testify before the Senate Banking Committee, and investors are also focused on US consumer-price index numbers due out on Friday.
Oil prices rose after dropping in recent weeks to levels not seen since the end of last year as investors lost faith in a deal between the Organization of the Petroleum Exporting Countries and non-OPEC producers to reduce output.
US shale-oil production also has risen sharply.
Brent crude was up 71 cents to $48.45 a barrel. US light crude rose 69 cents to $46.18.
US Treasury yields rose after falling for three straight days, tracking gains in German bond yields, with solid US economic data supporting their trend higher.
Benchmark 10-year US Treasury notes fell 9/32 in price to yield 2.3569%. The German 10-year Bund was up 2 basis points to 0.533%.