World shares hit new high, Europe shrugs off Greece fears
INVESTORS TO CLOSELY WATCH THE RESULTS OF THE TWO-DAY FED MEETING STARTING TODAY
World shares hit a new high yesterday, with European stocks joining the rally after early falls, as investors looked ahead to central bank meetings this week and put aside worries over Greece.
US stocks rose yesterday morning with the S&P touching a new intraday high and the Nasdaq inching closer to its record intraday high ahead of Apple’s results after the close.
At 11.33am EDT (1533 GMT) the Dow Jones Industrial Average was up 49.88 points, or 0.28 per cent, at 18,130.02, the S&P500 was up 3.6 points, or 0.17 per cent, at 2,121.29 and the Nasdaq Composite was up 8.71 points, or 0.17 per cent, at 5,100.80.
European equities advanced on speculation Greece will make progress on bailout negotiations. US stocks rose as technology shares gained before Apple Inc. results and gold rebounded from a five-week low.
The Stoxx Europe 600 Index jumped 0.9 per cent at 11.30am in New York, erasing an earlier loss of as much as 0.7 per cent, as Greek stocks and government bonds soared. The Standard & Poor’s 500 Index gained 0.2 per cent to a record 2,121.54. Gold climbed 2.3 per cent as conflicting US data clouded the outlook for higher interest rates.
Silver, copper and nickel all increased. The Taiwan dollar jumped the most since 2013 and US natural gas dropped to the lowest since June 2012.
Investors this week will also be closely watching the results of the two-day US Federal Reserve meeting, starting on Tuesday, for clues on when interest rates could be hiked.
Data on Monday showed that the US services sector’s expansion eased slightly in April from a seven-month high in March on a dip in new business growth.
Sub-par indicators
A slew of recent sub-par indicators have prompted analysts to downgrade their view of the US economic outlook and to push back expectations of when the Fed will increase rates for the first time since June 2006. Most economists now don’t see a rate hike until at least the end of the year.
“The reason the markets are reaching these levels is because earnings are coming in much stronger than expected,” said Jonathan Golub, chief US market strategist at RBC Capital Markets in New York.
“If you exclude the energy sector, earnings per shares are up about 10 per cent for the first quarter. Analysts lowered their expectation way too much.”
Of the S&P500 companies that have reported so far, 70.4 per cent have reported earnings above analysts’ expectations. In a typical quarter, about 63 per cent beat estimates.
The S&P500 hit a record intraday high of 2,125.92. The Nasdaq hit a high of 5,119.83, the closest it has been to its record of 5,132.52 in March 2000.
Apple shares rose 1.82 per cent to $132.66 in late morning trading. Analysts expect Apple’s quarterly revenue to rise 23 per cent to $56.07 billion (Dh205.9 billion), according to Thomson Reuters data.