World shares stay on record run, metals suffer meltdown

Euro close to more than three-year peak on ECB tapering hopes • Dow touches 26,000 mark in strong opening

LONDON (Reuters) – Asia and Europe’s big bourses kept world shares on their record-breaking run on Tuesday, although a steadier dollar halted the sizzling start to the year for the euro, yen and yuan and sent metals markets down sharply.

The Dow Jones Industrial Average touched the 26,000-mark for the first time on Tuesday and other Wall Street indexes climbed as strong earnings from UnitedHealth and Citigroup helped lift the sentiment.

The Dow rose 198.99 points, or 0.77%, to 26,002.18. The S&P 500 gained 13.76 points, or 0.493856%, to 2,800 at the beginning of trading Tuesday. The Nasdaq Composite added 45.95 points, or 0.63%, to 7,307.01.

MSCI’s all-country world index notched its third consecutive all-time high as growing confidence about the global economy pushed Japan’s heavyweight Nikkei to its best level since 1991 during a lively Asian session.

The pan-European STOXX 600 then crawled 0.4% higher as technology, car and insurance stocks offset a 1% drop in miners caused by the buckling metals prices.

Copper slumped 2.2%, while nickel plunged almost 4%. For both it was their biggest drop since early December, after which they went on to surge 10% and 20% respectively.

Analysts put the wobble partly down to supply issues after stockpiles of iron ore at China’s ports leapt to the highest since at least 2004, but also the dollar – used to price commodities – pulling out of a four-day dive.

“Everything this year (in commodity markets) has been largely about the dollar,” said Crédit Agricole FX Strategist Manuel Oliveri.

“It has been selling off regardless of rate expectations, regardless of the growth outlook,” he added, saying he expected it to start to stabilize.

The steadier dollar also brought an end to the euro’s four-day hot-streak, though there were other factors at play, too.

The single currency was buffeted in early European trading by reports that parts of Germany’s main opposition party are resistant to reforming a “Grand Coalition” with Angela Merkel’s conservatives.

It then took another step back after sources at the European Central Bank told Reuters that despite growing talk it will stop its mass stimulus program at the end of September, policymakers were unlikely to flag its end just yet.

The euro slipped down to $1.2215 from Monday’s three-year high of almost $1.23. The Japanese yen, which has also been on a strong run, was 0.15% lower at 110.6 per dollar.

Euro zone government bond yields switched direction, too, with German Bunds coming off recent highs and low-rated Italian and Portuguese debt outperforming as investors returned to some of 2017’s most profitable trades.

“We need more thorough analysis before making any change,” one of the ECB sources said.

Wall Street was set to keep the global stocks rolling with futures markets pointing to 0.5% to 0.9% gains for the S&P 500, Dow and Nasdaq which had been closed for a public holiday on Monday.

Overnight moves in Asia included a 1% jump by Japan’s Nikkei that saw it touch its highest since November 1991 and more gains for high-flying Chinese bourses.

Australian shares had stumbled 0.5% though as its heavyweight miners were bruised by the slide in metals prices.

“The yen’s appreciation against the dollar has stopped and this brightened sentiment, along with expectations for robust company quarterly results,” said Sumitomo Mitsui Asset Management’s Masahiro Ichikawa about Tokyo’s gains.

Japanese Finance Minister Taro Aso said on Tuesday that he did not see problems with the dollar weakening to around 110.80 yen, but that big swings in currencies would be problematic.

Crude oil prices were also softer after being driven to their highest levels since December 2014 this week by the dollar’s weakness and signs that production cuts by OPEC and Russia are tightening supplies.

Brent crude futures were down 30 cents, or 0.4%, at $69.94 a barrel after touching a high of $70.37 a barrel on Monday. Gold also shuffled back to $1,334 an ounce, after hitting a near four-month peak.

The other eye-catching move was another battering for crytocurrencies which have had a torrid start to the year following spectacular gains in 2017.