Continued positive Equity markets mood

Positive mood persisted for European stocks on Tuesday as Wall Street re-entered the fray at record levels amid optimism over the global economy. The dollar was also stronger and Treasury yields moved up as expectations build of tighter US monetary policy, a scenario that is hurting gold.

European government bond markets remain a focal point for investors after an opinion poll showed Marine Le Pen, the anti- euro far- right candidate, narrowed the gap with her rivals in the upcoming French presidential election.

The yield spread between France and Germany’s 10-year government bonds — in effect the premium investors charge Paris to sell its debt — hit 82 basis points on Monday, the widest level since August 2012. On Tuesday the benchmark Bund yields were up 2bp to 0.32% and equivalent maturity French bonds were 4bp up to 1.11%, taking the spread to 79bp.

In New York, the S&P 500, which was closed on Monday for the Presidents’ Day break, was at 2,356 at the opening bell, meaning that it was in line for another record close.

In Europe the pan-European Stoxx 600 was up 0.4% to its best level since December 2015, lifted by energy and telecoms groups. But London’s FTSE 100 lost 0.2%, helped by miners after BHP Billiton’s results, but hurt by banks after a poorly received report from HSBC.

In Asia, Japan’s Topix rose 0.6% as exporters received a boost from the weaker yen, but Australia’s S&P/ASX 200 eased 0.1% and the soft showing by HSBC also hindered Hong Kong’s Hang Seng, which shed 0.8%.

The stronger dollar and rising bond yields are weighing on gold, with the bullion sliding 0.8% to $1,228 an ounce. Brent crude, the international oil benchmark, was up 1.9% cent to $57.23 a barrel.