Housing sector lifts global shares; euro ‘firms’ up against greenback

Oil slips as supply trumps hopes for producer action

NEW YORK, Aug 23, (Agencies): World shares crept up on Tuesday with a boost from housing sectors while the dollar lost ground as investors awaited further clues on whether the Federal Reserve will raise US interest rates this year.

Wall Street opened higher for the first time in three days, and the Nasdaq hit a record intraday high, with the overall gain in US stocks led by technology and housing. Materials also rose nearly 1 percent.

Housing stocks jumped up by at least 1.75 percent after the Commerce Department reported new US single-family home sales soared unexpectedly to near nine-year highs in July.

The housing data helped traders fill the gap as markets await an annual gathering of global central bankers and a speech by Fed Chair Janet Yellen on Friday in the mountains of Wyoming.

“The big surprise (at Jackson Hole) would be a hawkish shift from Yellen which would be enough to rock the boat on risk and send US rates and the dollar sharply higher,” said Brad Bechtel, managing director at Jefferies in New York.

“But I doubt she wants to do this and would prefer a relatively mixed view that has elements of hawkishness and dovishness and ultimately results in a December tightening, but a dovish December tightening.”

The Dow Jones industrial average rose 43.76 points, or 0.24 percent, to 18,573.18, the S&P 500 gained 8.34 points, or 0.38 percent, to 2,190.98 and the Nasdaq Composite added 25.05 points, or 0.48 percent, to 5,269.65.

The bump in new home sales helped the US dollar trim losses, though the greenback was still down 0.11 percent to 94.42 against a basket of major currencies.

The euro firmed to $1.1321 as one major bank decided the news had been good enough that the European Central Bank will not need to cut its interest rates any deeper into negative territory, as it had previously expected.

European equities rose 1.02 percent, led by mining stocks, after data pointed to continuing gradual improvement in the region’s economy. Homebuilders there also saw a bounce following a solid update from Persimmon.

Surprisingly upbeat French PMI figures showed the private sector growing at its fastest in 10 months, while in Britain export orders hit a 2-year high to confound Brexit doom-mongering.

New Zealand’s dollar, meanwhile, was up 0.66 percent at $0.7316 after the country’s central bank forecast another 35 basis points in possible rate cuts, less than many investors had wagered on.

“The (US) dollar is weakening ... due to the general anticipation around Jackson Hole on Friday,” said Saxo bank’s head of FX strategy John Hardy.

“There is also a general reach for yield happening. That was one of the things we saw with (New Zealand central bank governor) Wheeler waving the white flag that he is not going to use easing to try and weaken the currency.”

Oil prices jumped as much as 2 percent, reversing earlier losses, after Reuters reported that Iran was sending positive signals that it may support joint OPEC action to prop up the market.

Brent crude was up 87 cents, or 1.8 percent, at $50.03 a barrel by 11:02 a.m. EDT (1502 GMT). It had fallen 1.4 percent earlier to $48.48.

US crude jumped 70 cents, or 1.4 percent, to $48.11.

US

US stock rose on Tuesday, with the Nasdaq hitting a record intraday high, led by technology companies and as robust housing market data strengthened the case for a firming economy.

With the US earnings season winding down, investors are also weighing up the prospect of an interest rate hike in the coming months.

Expectations that the Fed will continue to keep rates low, as well as some upbeat earnings and economic news have supported the benchmark S&P 500 index’s record-breaking run in the past few months.

“If we continue to keep getting strong economic data it will become hard for the Fed to rationalize not hiking rates,” said Erik Wytenus, global investment specialist at J.P. Morgan Private Bank in Palm Beach Florida.

“We’re seeing an almost eerily quite, very subdued continued melt-up environment.”

At 12:32 pm ET (1632 GMT) the Dow Jones industrial average was up 34.52 points, or 0.19 percent, at 18,563.94.

The S&P 500 was up 6.64 points, or 0.3 percent, at 2,189.28.

The Nasdaq Composite was up 18.74 points, or 0.36 percent, at 5,263.34, after hitting an all-time intraday high of 5275.74.

Eight of the 10 major S&P 500 indexes were higher, led by a 0.76 percent gain in the materials index. But the biggest boost was from the technology index’s 0.52 percent gain.

J.M. Smucker dropped 7.6 percent after its quarterly revenue missed estimates. The stock was chiefly responsible for the consumer staples index edging lower.

The defensive utilities sector, which tends to fall as prospects for a rate increase rise, was also in the red.

Europe

European shares advanced on Tuesday, with housebuilders leading the market higher and mining companies rebounding from their declines the day before.

Britain’s second-largest housebuilder, Persimmon, rose 4.2 percent after reporting its reservation rate had risen an annual 17 percent since the start of July. Some builders have warned Britain’s vote in June to leave the European Union could slow the property market.

“The group’s interims have run out better than we anticipated,” Shore Capital analyst Robin Hardy said. “The statement is bullish and confident and again seeks to ... push the message that the Brexit result is set to have little or no impact on the new homes market.”

Persimmon’s peers Taylor Wimpey, Barratt Developments and Bellway rose 4 to 6.1 percent.

The European basic resources index rose 2.6 percent, the biggest gain by a sector. BHP Billiton, Glencore and Anglo American rose 3 to 4.9 percent.

The pan-European STOXX 600 ended up 0.9 percent. Germany’s DAX rose 0.9 percent and France’s CAC gained 0.7 percent, helped by upbeat surveys of economic activity.

French economic activity accelerated to levels last seen just before militant attacks in Paris last November. German growth slowed in August but remained robust overall, suggesting Europe’s biggest economy would continue to expand .

A third survey showed activity in the euro zone was little changed in August, though manufacturers may face a tougher September as new order growth slowed.

unicredit rose 6.6 percent on speculation the Italian bank could be close to selling its remaining stake in Polish unit Bank Pekao to beef up its balance sheet.

On Monday, sources told Reuters the chief executive of Poland’s biggest insurer, PZU, would travel to Milan this week to discuss buying a stake in Pekao.

Asia

Energy firms sank in Asian trade on Tuesday as oil prices extended the previous day’s sharp losses due to profit-taking after a recent rally and fresh worries about a global oversupply.

Even a fall in the dollar, which usually makes crude cheaper, could not stop the slide in the commodity after Iraq flagged a pick-up in output and rebels in key producer Nigeria announced a ceasefire.

Investors were also treading water as they await a key speech from Federal Reserve boss Janet Yellen, hoping for some insight into the state of the US economy and the bank’s plans for its next interest rate rise.

After a seven-day rally that put oil into a bull market — a 20 percent jump from recent lows — the commodity has taken a hiding since the start of this week.

Among energy firms, Japan’s Inpex and JX Holdings each fell more than two percent, while in Hong Kong CNOOC shed more than one percent and petrochina 0.6 percent. Sydney-listed Woodside Petroleum eased 0.4 percent.

On regional stock markets, Tokyo’s Nikkei finished 0.6 percent lower, while Hong Kong was flat.

Shanghai added 0.2 percent and Sydney closed 0.7 percent higher while Seoul tacked on 0.4 percent.

The greenback fell to 99.94 yen at one point in Tokyo. It later edged back to 100.07 yen from 100.32 yen in New York, while it was also down against most high-yielding currencies including the Australian dollar and South Korean won. Key figures at 08:00 GMT Tokyo — Nikkei 225: Down 0.6 percent at 16,497.36 (close)

Shanghai — Composite: Up 0.2 percent at 3,089.71 (close)

Hong Kong — Hang Seng: Up 1.02 points at 22,998.93 (close)

Oil

Oil fell below $49 a barrel on Tuesday, giving up part of August’s strong rally, as signs of rising supply outweighed hopes that producing nations will agree steps to support prices.

A Nigerian militant group, which has claimed a wave of attacks on oil facilities, said at the weekend it was ready for a ceasefire and Iraq resumed pumping through a northern pipeline halted earlier this year.

Brent crude was down 52 cents at $48.64 a barrel at 1344 GMT. The global benchmark rallied 20 percent between the beginning of the month and Aug. 19. US crude was down 66 cents at $46.75. “Today we remain bearish on crude oil,” said Georgi Slavov, analyst at Marex Spectron. “Supply looks likely to increase in the short term.”

Goldman Sachs, in a report, said talk of an output freeze by the Organization of the Petroleum Exporting Countries and a weak dollar had helped drive prices up this month but neither was enough to sustain current levels.

Oil prices have more than halved from mid-2014 due to a global supply glut.

Raising hopes that producers could revive efforts to tackle excess supply, Saudi Arabia’s Energy Minister Khalid al-Falih said on Aug 11 OPEC and non-members will discuss the market next month including any action that may be needed.

Gold

Gold edged higher on Tuesday as markets shifted focus from hawkish comments by a Federal Reserve official at the weekend to a meeting of global central bankers this week, awaiting further guidance on US interest rates.

Spot gold rose 0.3 percent to $1,342.06 an ounce by 1437 GMT, having hit a twoweek low of $1,331.35 in the previous session. US gold was flat at $1,344.

Prices fell on Monday after weekend comments by the Fed’s No. 2 policymaker, Stanley Fischer, saying that the central bank is close to hitting targets for full employment and 2 percent inflation, raising the prospect of a US rate increase.

“There has been a bit of softness over the last couple of days owing to some comments from the Fed officials but now the market is staring into the headlights of the upcoming Jackson Hole meeting,” said Citigroup analyst David Wilson.

The Fed last week sent mixed messages in the minutes of its July meeting, though some members have suggested that rates could rise as soon as September.

The Fed increased rates for the first time in a decade in December, but expectations that it would hold off on further increases have helped to drive a 26 percent gain in gold prices this year.

Gold is highly sensitive to rising rates, which boost the opportunity cost of holding non-yielding bullion while lifting the dollar, in which it is priced.