Global stocks scale record high; dollar drops on US data, inflation

Crude prices climb on supply fear

NEW YORK, Nov 22, (Agencies): A gauge of global equity performance scaled fresh record highs on Wednesday, propelled by bullish growth and company earnings outlooks, while crude oil prices rose to more than two years highs.

Asia again led global markets higher as Hong Kong’s main Hang Seng index closed above 30,000 points for the first time in a decade. China’s H-shares index and Japan’s Nikkei share average also rose.

Shares in Europe were mixed, with Britain’s main index rising as Germany’s DAX index and other indices fell. Wall Street traded flat to slightly lower.

But MSCI’s all-country world index of stock performance in 47 countries rose 0.23 percent as it set a new alltime high. Emerging markets also rose, with MSCI’s main equity benchmark touching fresh six-year highs.

MSCI’s all-country world index gained 0.21 percent while the pan-European FTS-Eurofirst 300 index of leading regional shares closed down 0.25 percent.

The Dow Jones Industrial Average fell 47.05 points, or 0.2 percent, to 23,543.78. The S&P 500 lost 2.17 points, or 0.08 percent, to 2,596.86 and the Nasdaq Composite dropped 0.73 points, or 0.01 percent, to 6,861.75.

The S&P technology index fell 0.36 percent after two days of gains, pulled lower by an 8.2-percent drop in Hewlett Packard Enterprise after Meg Whitman said she would leave as chief executive in February.

Oil retreated slightly from a more than two-year high after US crude stockpiles fell less than an industry group had suggested on Tuesday.

Still, US crude prices remained elevated near $58 a barrel after sources said the Keystone pipeline will cut deliveries by 85 percent or more through the end of November.

US crude rose $1.06 percent to $57.89 a barrel and Brent was last up 44 cents at $63.01 a barrel.

The dollar fell, touching its lowest level in more than a month against the Japanese yen and the Swiss franc, after the release of weaker-than-expected US data and inflation expectations.

The dollar fell to 111.62 yen, its lowest since Sept. 26. Against the Swiss franc, the dollar fell to its lowest since Oct 20, hitting 0.9827 franc.

The euro rose to a session high against the dollar of $1.1796.

US

Wall Street indexes treaded water, staying near record levels, in late morning trading on Wednesday as technology and energy stocks battled for influence and investors awaited the minutes of the Federal Reserve’s latest policy meeting.

The S&P technology index fell 0.26 percent, after two days of gains, led by losses in Hewlett Packard Enterprise after Meg Whitman said she would leave as chief executive in February, six years into the job.

HP Enterprise fell more than 9 percent. HP Inc, which holds the computer and printer business that Whitman carved out of old Hewlett Packard, fell 8 percent after reporting an unimpressive profit.

The energy index rose 0.62 percent as US crude prices jumped 1.7 percent, easing only slightly from more than two year highs after data showed US crude stocks declined largely in line with expectations.

Trading volumes were thin ahead of the Thanksgiving holiday on Thursday and an early close on Friday. The CBOE Volatility index, known as Wall Street’s fear gauge, was down for the fifth session in a row and at two-week lows.

At 10:58 am ET (1558 GMT), the Dow Jones Industrial Average was down 17.09 points, or 0.07 percent, at 23,573.74, the S&P 500 was down 0.07 points, or 0.01 percent, at 2,598.96 and the Nasdaq Composite was up 4.93 points, or 0.07 percent, at 6,867.41.

The Fed minutes are due at 2:00 p.m. ET and will be scrutinized for the policymakers’ thinking on inflation for more clarity on what they might do under a new chair next year.

The minutes come a day after outgoing Chair Janet Yellen said she still expects inflation to rebound soon, added she was “very uncertain” if that would happen and was open to the possibility that prices could remain low for years.

A final quarter-point rise under Yellen next month is almost fully baked in. The pace of hikes have also been slow enough not to scare stock investors who have thrived on a decade of cheap money. The S&P is up about 16 percent this year so far.

Among stocks, tractor maker Deere & Co rose nearly 5 percent to record high after reporting upbeat quarterly earnings and issuing a strong profit forecast for the year.

Advancing issues outnumbered decliners on the NYSE by 1,583 to 1,107. On the Nasdaq, 1,646 issues rose and 1,075 fell.

Europe

European shares slipped after two days of gains on Wednesday, led by the DAX, which was hit by a bounce in the euro as well as deadlock in attempts to form a new German government.

The pan-European STOXX 600 benchmark closed 0.3 percent lower, with the DAX falling 1.2 percent following strong gains in the previous session. The euro was up 0.4 percent against the dollar.

The FTSE added 0.1 percent, helped by gains among big international companies including drugmaker Shire and bank HSBC Holdings, while SSP Group rallied following a strong trading update.

The STOXX 600 has seen a net rise of 0.7 percent over the last three days following a small correction earlier this month that brought the index down from two-year highs.

The biggest STOXX decliner was debt-laden telecoms and cable group Altice, which dropped to its worst level since 2014, closing down 8.8 percent.

The top gainer was travel location food-outlet operator SSP Group after it beat expectations for full-year results and proposed a special dividend. Its shares rose 8.6 percent to a record high.

Energy was among the biggest sectoral gainers in Europe, up 0.4 percent and led by Tullow Oil as oil prices remained near a two-year high, while consumer goods were the biggest decliners.

Akzo Nobel rose 1.3 percent after it called off a merger of equals with US coatings company Axalta.

Norwegian media group Schibsted fell 6.7 percent following a share issue to bolster its capital and pay for possible market consolidation in online classifieds.

Thomas Cook fell 8.4 percent, it biggest one-day drop since the British EU referendum in June 2016, after the travel firm reported a fall in full-year profit margins.

Asia

Hong Kong stocks ended above the 30,000 mark for the first time in 10 years on Wednesday as Asian markets extended a global rally following another record close on Wall Street.

The positive energy flowed through to Asia, where Hong Kong pushed 0.6 percent higher, sitting above the 30,000 barrier for the first time since late 2007.

The Hang Seng Index has soared by a third this year, boosted by Tencent, which has doubled in value in that period — helping the internet giant surpass half a trillion dollars in market capitalisation and overtaking Facebook.

The HSI is less than 2,000 points off its record high seen in October 2007, and Kevin Tam, deputy head of research at Core Pacific Yamaichi, told AFP: “I do not see any reason it cannot break the record. Currently the uptrend is quite solid.”

Regarding Tencent’s rally, he added: “It’s likely sustainable because Tencent will book financial gains in the fourth quarter.”

He said gains from the listing of Tencent’s e-book spin-off China Literature will be included for that quarter. China Literature almost doubled in value on its debut earlier this month. However, Tencent slipped 0.7 percent on profit-taking Wednesday.

Across the rest of Asia investors were buoyant, sending Tokyo jumping 0.5 percent, Shanghai 0.6 percent up and Sydney 0.4 percent higher.

Seoul, Singapore and Taipei each rose 0.4 percent, while Jakarta and Wellington were also well up. Key figures around 0820 GMT Tokyo — Nikkei 225: UP 0.5 percent at 22,523.15 (close)

Hong Kong — Hang Seng: UP 0.6 percent at 30,003.49 (close)

Shanghai — Composite: UP 0.6 percent at 3430.46 (close)

Dollar/yen: DOWN at 112.15 yen from 112.44 yen

Oil

Oil extended gains on Wednesday, with US crude hitting $58 a barrel for the first time since July 2015 as a major pipeline cut Canadian crude flows to the United States, where inventories are expected to have fallen further.

The Keystone pipeline will cut deliveries by 85 percent or more through the end of November, sources said. A report from the American Petroleum Institute (API) showed a big drop in US crude stocks, ahead of Wednesday’s official inventory data.

US crude rose to $58.05 a barrel, the highest since July 2015, before easing to $57.76, up 93 cents, by 1434 GMT. Brent crude, the global benchmark, was up 40 cents at $62.97.

Gold

Gold prices rose on Wednesday as weaker-than-expected US data pushed the dollar lower before the release of minutes from the latest US Federal Reserve meeting that could hint at the pace of future interest rate rises.

The minutes, to be published at 1900 GMT, come after outgoing Fed Chair Janet Yellen said rates should rise gradually but warned she was “very uncertain” that inflation would soon rebound, suggesting a cautious approach to rate increases.

Already down on the day, the dollar weakened further after data showed new orders for key US-made capital goods unexpectedly declined in October. US bond yields also fell

Gold is sensitive to rising rates because they tend to boost the dollar, making gold more expensive for holders of other currencies, and push up bond yields, reducing the appeal of non-yielding gold.

Spot gold was up 0.7 percent at $1,289.85 an ounce at 1536 GMT, while US gold futures for December delivery were 0.6 percent higher at $1,289.40 an ounce.

Gold has benefited from a flattening in the US Treasury yield curve that has supported the Japanese yen and pushed the dollar lower, Saxo Bank analyst Ole Hansen said.

The US yield curve hit the lowest in a decade on Tuesday on expectations that the Fed will raise rates, inflation will remain low, and government will increase debt issuance in short-and intermediate-dated maturities while delaying big increases at longer dates.

“Gold has been stuck in a range with an average price of $1,280 since early October but we are seeing some higher lows and higher highs, which indicates there is underlying support for the market,” Hansen said.