Global stocks scale new peaks on retailer results; crude slips

Dollar marginally lower against major peers

NEW YORK, May 25, (Agencies): World stock markets scaled fresh highs on Thursday, with key US indexes lifted by rosy retailer results, while the US dollar dipped and oil prices fell after top oil producers extended output cuts for a shorter period than expected.

The US benchmark S&P 500 index and Nasdaq Composite opened at record highs, while the VIX “fear gauge” of expected volatility in the S&P 500 opened at 9.82, its lowest since May 10.

Gains were propelled by sturdy sales data at electronics retailer Best Buy, lifting its shares as much as 17 percent as top gainer on the S&P 500. Robust results also boosted Tommy Hilfigerowned PVH by 7 percent.

Oil prices fell as OPEC prepared to extend supply curbs by nine months to March 2018 to drain a glut that has depressed markets for almost three years. This was a shorter period of time for such limits than some market participants had expected.

US share indexes were boosted a day earlier after minutes from the Federal Reserve’s May 2-3 meeting signaled its policymakers would hold off on raising interest rates soon until it is clear that a recent US economic slowdown is temporary.

In Europe, the pan-European FTSEurofirst 300 index was little changed, losing just 0.03 percent. The pan-European STOXX 600 index was led lower by basic resources and energy companies earlier in the day; it still held close to 21-month highs.

Steelmakers were hit after iron ore prices fell for a third day, on concern over reduced Chinese demand.

MSCI’s gauge of stocks across the globe gained 0.47 percent.

In the currency markets, the euro edged down 0.04 percent to $1.1213, pulling further away from Tuesday’s 6 1/2-month high of $1.1268.

The dollar index, which measures the greenback against a basket of major currencies, fell 0.09 percent, as key currencies tracked the drop in oil prices. US bond yields dipped ahead of a $28 billion sale of seven-year notes. The benchmark 10-year yield was down 1.6 basis point on Thursday at 2.25 percent.

US

US stocks rose on Thursday, with the S&P 500 and Nasdaq Composite scaling new highs, buoyed by strong earnings reports from the embattled retailer sector.

Sentiment also got a boost after the minutes of the Federal Reserve’s latest meeting showed policymakers expected the economy to pick upmmentum and an interest rate hike would come sooner rather than later.

While gains were broad based, the consumer discretionary index’s 1.03 percent surge was easily the highest among the 11 major S&P sectors.

Best Buy surged as much as 19.4 percent to a record high of $60.24, making it the top gainer on the S&P, as its comparable sales unexpectedly rose last quarter.

Tommy Hilfiger-owner PVH was second-biggest S&P gainer with a 7 percent jump to a near 6-month high on strong results. Sears was up about 14 percent after posting its first quarterly profit in nearly two years.

Analysts also said the S&P 500 being able to break through and stay above the 2,400 level for the third straight session has also provided technical support.

At 12:42 pm ET (1642 GMT) the Dow Jones Industrial Average was up 73.14 points, or 0.35 percent, at 21,085.56.

The S&P 500 was up 11.66 points, or 0.484946 percent, at 2,416.05, easing off from a high of 2,417.58.

The Nasdaq Composite was up 44.60 points, or 0.72 percent, at 6,207.62. The index hit an all-time high of 6,209.05.

Amazon, up 1.8 percent, gave the biggest boost to the S&P and Nasdaq. The stock hit a record of $999, on the brink of breaking through $1,000 for the first time ever.

Only two S&P indexes in the red, led by the energy sector. The index sank 1.29 percent along with crude oil prices after the OPEC agreed to extend output cuts, but not by as much as investors had hoped for.

Advancing issues outnumbered decliners on the NYSE by 1,504 to 1,331. On the Nasdaq, 1,482 issues rose and 1,260 fell.

The S&P 500 index showed 84 new 52-week highs and nine new lows, while the Nasdaq recorded 118 new highs and 44 new lows.

Europe

Europe’s main stock markets wobbled in and out of positive territory, unable to match gains made across Asia, where traders welcomed indications from the Federal Reserve that US interest rates could rise next month.

London’s FTSE 100 shares index ended with a marginal gain despite sentiment being hit by a revision of Britain’s first-quarter economic growth to 0.2 percent from an initial estimate of 0.3 percent.

Trading was lacklustre in Frankfurt and Paris where many businesses were closed for a public holiday.

UK

British shares steadied on Thursday as investors sought fresh catalysts after a run that lifted the country’s main indexes to record highs, while Petrofac saw one third of its value wiped out amid worries over a fraud investigation.

The FTSE 100 ended up 0.04 percent, shy of a record high hit last week, as weakness among commodity stocks was more than offset by stronger financials and consumer stocks.

The biggest stock movers were mid caps, although the FTSE 250 index also ended broadly unchanged and very close to the record high hit this week.

Petrofac fell 30 percent, making it the biggest FTSE 250 faller, after the oilfield services firm suspended its chief operating officer in response to a British investigation into alleged bribery, corruption and money laundering.

Another top faller was Tanzania-focused miner Acacia Mining . Its stock was under pressure for a second day, down 12.8 percent, after the country’s mining minister was fired on Wednesday following an investigation into possible undeclared exports by miners to evade tax.

Among other commodity stocks, miners Anglo American, Rio Tinto and Glencore all fell but came off lows as copper prices reversed course to hit three-week highs as worries about prolonged disruptions at the giant Grasberg copper mine in Indonesia triggered short-covering.

Among top FTSE gainers was 3I Group, which rose 3.7 percent after a broker lifted the price target on the private equity and venture capital company.

Intermediate Capital Group soared 14 percent after its full-year results, and GVC Holdings rose by 2percent after a first-quarter update.

Media group Daily Mail and General Trust fell 6.8 percent as it warned that revenue in its information business would be lower than previously forecast after posting a fall in first half profit.

Asia

Asian markets rose Thursday as traders welcomed indications from the Federal Reserve that interest rates could rise next month, while oil prices rallied ahead of an expected extension to output cuts.

Nikkei in Tokyo ended 0.4 percent higher, while Sydney put on 0.4 percent.

Shanghai jumped 1.4 percent as dealers brushed off a cut in China’s debt rating Wednesday by Moody’s, with speculation state-backed funds were supporting the market.

Hong Kong added 0.8 percent, a fifth-straight gain, with the city’s finance minister hitting out at Moody’s decision to also downgrade the city, citing increasingly closer economic links with the mainland.

Seoul jumped 1.1 percent to a fresh record after the South Korean central bank kept interest rates on hold citing an improving economy. Singapore, Taipei and Wellington also posted healthy gains.

Key Figures around 082o GMT Tokyo – Nikkei 225: UP 0.4 percent at 19,813.13 (close)

Hong Kong – Hang Seng: UP 0.8 percent at 25,630.78 (close)

Shanghai – Composite: UP 1.4 percent at 3,107.87 (close)

London – FTSE 100: UP 0.2 percent at 7,527.38

Euro/dollar: UP to $1.1234 from $1.1216

Dollar/yen: UP to 111.73 yen from 111.52 yen

Pound/dollar: UP to $1.2986 from $1.2972

Oil

Oil prices fell about 4 percent on Thursday, on track for their biggest daily drop in three weeks, after OPEC’s decision to extend production curbs fell short of expectations of deeper or longer cuts.

As expected, the Organization of the Petroleum Exporting Countries, along with other non-OPEC members, agreed to extend a cut in oil supplies of 1.8 million barrels per day (bpd) until the end of the first quarter of 2018 to reduce a glut of supply.

However, in the days prior to the meeting, talk of a possible extension for 12 months, or deeper cuts than the current agreement, helped buoy prices on optimism of a faster drawdown in supply.

In Vienna on Thursday, Saudi Arabia’s energy minister, Khalid al-Falih, said ministers did not see a need to reduce oil output further.

Brent crude oil was down $2.07, or 3.8 percent at $51.89 a barrel by 1:02 pm (1702 GMT), after hitting a low of $51.32.

US West Texas intermediate crude futures was trading $2.05 or 4 percent lower at $49.31. WTI plunged as much as 5 percent to a low of $48.75, breaking through $50 for the first time all week as volumes rose sharply.

Both benchmarks were on track for their biggest percentage decline in three weeks.

John Kilduff, partner at energy hedge fund Again Capital LLC in New York, said the market is witnessing a classic “buy-the-rumor, sell-the-news” cycle.

Gold

Gold held steady on Thursday as the dollar weakened after minutes from a US Federal Reserve meeting suggested that the central bank could take a more cautious approach to interest rate increases.

Fed policymakers had agreed at the meeting that they should hold off from raising rates until it is clear that a recent US economic slowdown is only temporary, though most said an increase is coming soon.

Higher interest rates tend to boost the dollar and push bond yields up, increasing the opportunity cost of holding non-yielding bullion and thereby pressuring gold prices.

Spot gold was virtually flat at $1,257 an ounce at 1354 GMT, clinging to Wednesday’s 0.6 percent gain, while US gold futures were up 0.3 percent at $1,256.