World stock index breaks 500 pts barrier; dollar gains as euro slips

Crude oil prices at 2-1/2 year high

NEW YORK, Nov 7, (Agencies): The global rally in stocks showed no sign of slowing on Tuesday, continuing a nine-day advance that sent the most widely tracked index of world stock markets to record highs.

The latest leg of the run came as Japan’s Nikkei hit its best level since 1992, Germany’s DAX scored a record high and Monday’s 2-1/2 year top in oil prices again boosted European resources stocks.

All three of Wall Street’s major indexes opened at all-time highs , while the MSCI 47-country ‘All World’ index added 0.2 percent to top 500 points, a record high. The index is up nearly 20 percent for the year to date.

After hitting all-time highs, the Dow Jones Industrial Average fell 7.2 points, or 0.03 percent,as up 7.11 points, or 0.03 percent, to 23,541.22, the S&P 500 lost 0.05 points, or -0.00 percent, to 2,591.08 and the Nasdaq Composite dropped 16.36 points, or 0.24 percent, to 6,770.08

The only bears remained in the Gulf, as nervousness around the weekend purge of royals and officials in Saudi Arabia sent its stock market down again and Kuwait’s bourse tumbled more than 4 percent. EMRG/FRX

Oil prices, meanwhile, held most of their gains after posting the biggest rise in six weeks following the Saudi crown prince’s move to tighten his grip on power and crank up tensions between the kingdom and Iran.

US crude drifted back to $57.24 in Europe after reaching as high as $57.69 and Brent crude futures were at $64.04 after touching a peak of $64.65 a barrel.

The dollar was also on the move amid signs of more change at the Federal Reserve, while President Donald Trump’s Republican party pushes ahead with its tax cut program.

The dollar index rose 0.34 percent, with the euro down 0.37 percent to $1.157 — the single currency’s lowest since mid-July.

The Japanese yen weakened 0.35 percent versus the greenback at 114.09 per dollar, while Sterling was last trading at $1.3139, down 0.24 percent on the day.

US

Wall Street lost steam in late afternoon on Tuesday after scaling to record levels with the S&P and the Dow trading flat and the Nasdaq slipping on weak forecast from travel services company, Priceline.

Shares of Priceline fell 11 percent and that of travel-review website operator TripAdvisor hit a five-year low after the companies gave soft fourthquarter profit forecasts.

Investors are also waiting for more clarity on President Donald Trump’s tax-cut plan as the earnings season winds down.

Republicans plan to bring their tax overhaul bill for a vote next week, US House Ways and Means Committee Chairman Kevin Brady said on Tuesday, adding that he expects the plan to pass.

House Republicans last week unveiled a first draft that proposed a range of cuts aimed at helping businesses, including slashing the corporate rate to 20 percent from 35 percent.

The S&P has risen about 15 percent in 2017 on the back on strong earnings, an improving economy and Trump’s promise to cut taxes.

With more than 400 of S&P 500 companies having reported, earnings for the third quarter are expected to have climbed 8 percent, compared with expectations of a 5.9 percent rise at the start of October, according to Thomson Reuters I/B/E/S.

At 10:59 am ET (1459 GMT), the Dow Jones Industrial Average was down 15.3 points, or 0.06 percent, at 23,533.12, the S&P 500 was down 0.55 points, or 0.02 percent, at 2,590.58.

The Nasdaq Composite was down 18.77 points, or 0.28 percent, at 6,767.67.

Seven of the 11 major S&P sectors were lower, with the financial index’s 0.42 percent loss leading the decliners.

Investors will also lend an ear to a speech from outgoing Federal Reserve Chair Janet Yellen at a presentation of the Paul H. Douglas Award for Ethics in Government in Washington at 2:30 pm ET.

Her speech will come less than a week after President Donald Trump chose Fed governor Jerome Powell to replace Yellen at the end of her term in 2018.

Weight Watchers jumped 16.3 percent after the weight management company raised its profit forecast.

Valeant Pharma surged 14.8 percent after the company’s profit beat Wall Street estimates.

Emerson Electric fell 2.5 percent as the factory automation equipment maker’s forecast disappointed investors.

Europe

Europe’s stock markets retreated Tuesday on worries over simmering Middle East tensions, which are centred on Saudi Arabia and have catapulted oil prices to two-year peaks.

A sliding pound and buoyant oil prices failed to lift the mood in British shares on Tuesday as grim economic data and disappointing corporate earnings from G4S and Primark owner ABF weighed.

Despite a positive start, Britain’s FTSE 100 ended the session down 0.65 percent, roughly in line with European peers and as most sectors traded in negative territory.

“When you consider how much ground the FTSE 100, DAX and CAC have made in the past couple of months, a pullback of this size isn’t anything out of the ordinary,” David Madden, market analyst at CMC Markets, said.

Shares in the world’s largest security group G4S sank 4.7 percent after the firm downgraded its revenue outlook for the rest of the year.

Associated British Foods, which owns the Primark fashion chain as well as major grocery and agriculture businesses, fell 3.6 percent after the CEO said sugar profits would fall in 20172018 due to lower EU prices.

The mood in the retail sector was also depressed after the British Retail Consortium (BRC) said shoppers cut back their spending last month at the fastest pace for any October since 2008.

Energy stocks provided some support as crude prices held around mid2015 highs with BP rising 0.7 percent and, in the mid-cap segment, Tullow Oil up 3 percent.

William Hill shares jumped 4.3 percent after Bank of America Merrill Lynch analysts gave the gambling company a double upgrade to “buy” from “underperform”.

William Hill and rival betting firm Ladbrokes Coral had made gains last week after the UK government’s review on maximum stakes for gambling machines, with analysts saying the risk was priced in.

Among small-caps, Fevertree sparkled, up 14.9 percent after an impressive trading update. The maker of premium mixers said 2017 results would beat expectations.

Asia

Asian markets rose Tuesday, with Tokyo and Sydney breaking through historic ceilings thanks to strong corporate earnings and a positive global growth outlook.

Japan’s Nikkei closed at its highest level since January 1992, and Sydney’s S&P/ASX 200 broke above the psychologically important 6,000 points barrier for the first time since the global financial crisis.

The upward trend tracked overnight records on Wall Street, where US stocks hit fresh highs for the second straight day amid a tech-sector megamerger, rising oil prices, solid economic data and a series of strong earnings reports.

In Asia markets appeared to have shrugged off nervousness over tensions on the Korean peninsula, with US President Donald Trump visiting Seoul.

Japan’s rally has been aided by a strong earnings season, with Toyota on Tuesday the latest major corporate to raise its profit forecast for the year.

Japan’s number-one carmaker said its net profit rose 13.2 percent to 1.07 trillion yen ($9.4 billion) for the six months to September, citing a cheaper yen and cost-cutting efforts.

In Sydney improving oil and iron ore prices sent Australian mining stocks higher, while the central bank left interest rates at a record low.

Hong Kong gained 1.4 percent, while Singapore was up 0.8 percent in afternoon trading.

Singapore-based Broadcom’s $130-billion unsolicited bid for rival chip manufacturer Qualcomm in a cash and stock offer, announced overnight, sent chip-related shares broadly higher.

Key figures around 0840 GMT Tokyo - Nikkei 225: UP 1.7 percent at 22,937.60 (close)

Hong Kong - Hang Seng: UP 1.4 percent at 28,994.34 (close)

Shanghai - Composite: UP 0.8 percent at 3,413.57 (close)

Dollar/yen: UP at 114.18 from 113.71 yen

Oil

Oil eased on Tuesday, having posted its largest gain in six weeks the previous day, while tension flared between Saudi Arabia and Iran, just as the Saudi crown prince tightened his grip on power.

Brent crude futures were down 49 cents at $63.78 a barrel by 1503 GMT, having climbed by 3.5 percent on Monday.

US West Texas Intermediate (WTI) crude was down 36 cents at $56.99 a barrel.

Saudi Crown Prince Mohammed bin Salman moved to shore up his power base with the arrest of royals, ministers and investors, which an official described as part of “phase one” of a crackdown.

More tellingly, tensions escalated between OPEC members Saudi Arabia and Iran, which analysts said did more to rattle the market than the prince’s purge.

The Organization of the Petroleum Exporting Countries, led by Saudi Arabia, has agreed to restrain crude output by 1.8 million barrels per day (bpd) together with 10 other nations including Russia until March 2018.

OPEC meets at the end of this month and has been widely expected to extend the deal.

Gold

The price of gold eased on Tuesday as investors locked in gains following the biggest one-day rise in six weeks, after news of a string of high-profile arrests in Saudi Arabia sent the price of oil to a 2-1/2 year high, and the dollar and US Treasury yields sank.

Spot gold was down 0.3 percent at $1,275.99 an ounce at 1455 GMT, while US gold futures for December delivery were $4.90 an ounce lower at $1,276.70.

The price rallied in New York trading on Monday to end the day up nearly 1 percent, erasing losses made in earlier trading and throughout the previous session.

The Saudi-led jump in the oil price, a drop in the US dollar and jitters linked to US President Donald Trump’s trip to the Far East all conspired to push gold prices higher, MKS’s head of trading Afshin Nabavi said.

However, the price was struggling to maintain those gains, he added, and stuck broadly within the $20 range of the past two weeks.