Global equities boosted by US data; dollar pares back gains

Gasoline futures surge as refinery closures sap supplies

NEW YORK, Aug 31, (Agencies): An index of global equity markets rose to a three-week high on Thursday after data showed US inflation increased at its slowest pace since late 2015, boosting expectations that the Federal Reserve will hold off from increasing interest rates again this year.

The dollar pared advances against a basket of major currencies, while US Treasury prices gained slightly as simmering tensions with North Korea kept up demand for the safe-haven bonds.

MSCI’s world index, which tracks shares in 46 countries, was boosted by a higher open on Wall Street and rose 0.44 percent.

The Dow Jones Industrial Average rose 52.12 points, or 0.24 percent, to 21,944.55, the S&P 500 gained 10.05 points, or 0.41 percent, to 2,467.64 and the Nasdaq Composite added 37.21 points, or 0.58 percent, to 6,405.52.

European stocks rallied after Reuters reported that the euro’s rapid gains are worrying a growing number of European Central Bank policymakers, raising the chance asset purchases will be phased out only slowly. The pan-European STOXX 600 was up 0.85 percent.

The euro, which hit a more than 2-1/2-year high against the dollar on Tuesday, slipped on the Reuters report.

The greenback retreated after the US inflation data and the dollar index, which measures the greenback against a basket of six major rivals, was little changed on the day at 92.912, after rising as high as 93.347.

Gold prices rose as the dollar weakened, while rising security concerns created by tensions on the Korean peninsula supported sentiment.

Spot gold was up 0.56 percent at $1,315.71 an ounce.

Oil prices rose, clawing back some of Wednesday’s losses, but US crude remained on track for the steepest monthly losses in more than a year on demand concerns after floods knocked out a quarter of US refining capacity. Brent oil, was up 2.32 percent to $52.04 a barrel. US crude was up 2.5 percent to $47.11.

US

US stocks extended gains in early afternoon trading on Thursday as largely upbeat data pointed to strength in the economy and investors cheered Treasury Secretary Steven Mnuchin’s comments on tax reform.

Investors are also awaiting the comprehensive monthly jobs report on Friday, which will help investors gauge the strength of the labor market as they look for clues on the Fed’s next move on rates.

At 12:21 pm ET (1621 GMT), the Dow Jones Industrial Average was up 43.9 points, or 0.2 percent, at 21,936.33 and the S&P 500 was up 11.86 points, or 0.48 percent, at 2,469.45.

The Nasdaq Composite was up 54.65 points, or 0.86 percent, at 6,422.96.

Ten of the 11 major S&P sectors were higher, with the health index’s 1.13 percent rise leading the advancers. UnitedHealth’s 1 percent gain provided the biggest boost to the Dow. The Nasdaq biotech index rose 2.18 percent, helped by a rise in Gilead, Celgene and Biogen.

Dollar General fell 4.85 percent after reporting a slide in secondquarter margins.

Campbell Soup slid 6.23 percent, becoming the biggest percentage loser on the S&P, after the company warned that sales for fiscal 2018 could fall. Advancing issues outnumbered decliners on the NYSE by 2,114 to 696. On the Nasdaq, 2,162 issues rose and 687 fell.

Europe

European shares rose for a second day on Thursday following heavy losses on jitters over North Korea but posted a third straight month of decline, while a profit warning from Carrefour sank the retail sector.

The pan-European STOXX 600 ended up 0.8 percent, boosted by strong gains for miners and construction stocks, while the retail sector dropped 1.3 percent.

Also buoying the market was a Reuters report that rapid gains in the euro, which helped drag the STOXX to a six-month low this week, were worrying a growing number of ECB policymakers, raising the chance asset purchases will be phased out only slowly.

Carrefour shares fell 13 percent, their biggest daily drop in 20 years, after the French supermarket chain warned 2017 profit could decline by 12 percent and cut its sales growth target.

It reported weaker-than-expected first-half earnings as intense retail competition weighed on margins.

French peer Casino fell 2.8 percent as investors saw similar pressures hitting it. Analysts at Jefferies said Carrefour’s results had forced a re-evaluation of their investment thesis.

The retail index has been one of the worst-performing in Europe this year as competition and structural pressures mount.

Pernod Ricard shares slipped 1.9 percent after the world’s second-biggest spirits group said currency exchange would be a bigger weight on earnings than previously expected.

Miners Antofagasta, Anglo American and Glencore rose sharply, helping to lift the index as copper prices gained on stronger Chinese demand.

Chipmakers AMS and Dialog Semiconductor rose 5.1 and 4.3 percent respectively as the suppliers to smartphone maker Apple benefited from increased investor enthusiasm ahead of the next iPhone release, a trader said.

Though banking stocks helped stoke gains on Thursday, they suffered their worst monthly losses since June last year when Britain’s vote to exit the EU roiled markets.

The STOXX 600 ended in the red for a third month.

Asia

The dollar extended its gains on Thursday as strong US growth and jobs data helped traders move past North Korea’s missile test but oil struggled as deadly storm Harvey batters the Gulf Coast.

Markets across Asia rallied Wednesday after the previous day’s North Korea-fuelled losses as US President Donald Trump’s apparently measured response soothed fears about possible conflict in the region.

The greenback rallied against the euro and yen — considered a safe bet in times of crisis — as the strong readings revived speculation the Federal Reserve could consider lifting interest rates for a third time this year. Eyes will now turn to the release of key official figures on Friday.

The weak yen supported Japanese exporters, with Tokyo’s Nikkei ending 0.7 percent higher, while Sydney added 0.8 percent and Singapore gained 0.5 percent. Wellington and Taipei were also higher.

However, Shanghai dipped 0.1 percent as official figures showed a rise in Chinese factory activity in August but not strong enough to ease concerns about the world’s number two economy, which is growing at its slowest pace in more than a quarter of a century.

Hong Kong eased 0.4 percent, with profit-takers also moving in after enjoying six days of gains in the previous seven trading days.

Key figures around 0820 GMT Tokyo - Nikkei 225: UP 0.7 percent at 19,646.24 (close)

Hong Kong - Hang Seng: DOWN 0.4 percent at 27,970.30 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,360.81 (close)

Dollar/yen: UP at 110.47 yen from 110.29 yen

Oil

Oil prices rose 1 percent on Thursday, clawing back some of the losses made a day earlier, but US crude is on track for the steepest monthly losses in more than a year on demand concerns after floods knocked out a quarter of US refining capacity.

Prices also rallied in the oil products markets, with US gasoline futures hitting a two-year high above $2 a gallon, buoyed by fears of a fuel shortage just days ahead of the Labor Day weekend that typically brings a surge in driving.

Hurricane Harvey, which brought record flooding to the US oil heartland of Texas and killed at least 35 people, has paralysed at least 4.4 million barrels per day (bpd) of refining capacity, according to company reports and Reuters estimates.

The shutdowns also led the US government to tap its strategic oil reserves for the first time in five years on Thursday, releasing 500,000 barrels of crude to a working refinery in Louisiana.

US West Texas Intermediate (WTI) crude futures were set to close the month down 7 percent, their steepest monthly loss since July 2016. They were trading 1.4 percent up at $46.58 a barrel at 1352 GMT.

International benchmark Brent crude was up 58 cents, or 1.1 percent, at $51.44 a barrel. It had fallen more than 2 percent in the previous session. Analysts at Goldman Sachs and Stifel said they expected US infrastructure outages to last several months but said it was difficult to estimate the exact damage.

Gold

Gold prices rose on Thursday as the dollar retreated after data showed subdued price pressures in the United States, while rising security concerns created by tensions on the Korean peninsula supported sentiment.

The dollar slipped on news that annual inflation rose at its slowest pace since late 2015, which diminished expectations of a Fed rate rise in December.

A falling US currency — already near its lowest since 2015 — makes dollar-denominated gold cheaper for holders of other currencies, which could boost demand.

Spot gold was up 0.2 percent at $1,311.77 an ounce at 1344 GMT, on track for a rise around 3 percent this month. US gold futures gained 0.2 percent to $1,316.80. Gold prices are up around 13 percent so far this year.

Some of that gain came after North Korea fired a missile over Japan. That was followed two days later by South Korea’s air force conducting an exercise with two US nuclearcapable bombers above the Korean peninsula on Thursday.