S&P, Dow set ‘records’ again as dollar touches 4-month high

Oil prices reach 2-month lows; gold hits-week low

NEW YORK, July 20, (Agencies): Upbeat company earnings lifted US and European stock prices on Wednesday, with the Dow and Standard & Poor’s 500 setting record highs, while the dollar reached a fourmonth peak on bets the US Federal Reserve may raise interest rates by year-end.

The impressive run in major equity markets around the globe led investors to reduce their safe-haven positions in US and German government debt, sending their yields higher.

Oil prices fell to a two-month low before US data that may signal whether a supply glut in the top consuming country was easing.

Shortly after their open, the Dow Jones industrial average was up 14.72 points, or 0.08 percent, to 18,573.73, the S&P 500 was up 3.23 points, or 0.15 percent, to 2,167.01 and the Nasdaq Composite was 27.29 points, or 0.54 percent higher, at 5,063.66.

Microsoft and Morgan Stanley were the latest US companies whose quarterly results topped analysts estimates.

Across the Atlantic, SAP, Europe’s largest software group, and ASML Holding, a supplier to semiconductor makers, reported quarterly results that beat forecasts.

They helped propel Europe’s broad ftseurofirst 300 index up 0.58 percent to 1,340 points.

The MSCI world equity index, which tracks shares in 45 nations, rose 0.65 points or 0.16 percent, to 411.48.

Earlier, Japan’s Nikkei broke a sevenday winning streak, falling 0.3 percent.

While most global stock markets post gains, investors scaled back their holdings of low-yielding government bonds, with US and German yields near their highest levels since Britain’s vote to leave the European Union on June 23.

Benchmark US 10-year Treasury yield was up 3 basis points at 1.59 percent, while 10-year German Bund yield edged up 1 basis point at -0.17 percent.

The dollar index was up 0.1 percent at 97.133.

A stronger greenback partly weighed down oil prices with US crude futures falling a two-month low ahead of domestic data on energy inventories at 10:30 a.m. (1430 GMT).

Brent crude was last down $0.44, or down 0.94 percent, at $46.22 a barrel. US crude was last down $0.68, or down 1.52 percent, at $43.97 per barrel.

Gold declined to a three-week low on rising equity prices and a stronger dollar. It fell $15.15 or 1.14 percent, to $1,316.58 an ounce.

US

US stocks rose on Wednesday, with the Dow and the S&P 500 hitting fresh records, as Microsoft’s strong results boosted optimism regarding the health of quarterly earnings.

Also helping stocks was a reversal in oil prices, with Brent crude up nearly 1 percent, after data shows weekly crude inventories fell slightly more than expected.

Microsoft surged 6.4 percent to $56.47, providing the biggest boost to the three major indexes, after its results handily beat expectations.

The technology index rose 1.34 percent, leading the six gainers among the 10 major S&P sectors. The energy index was flat, pulling back from a decline of 1 percent.

Morgan Stanley was up 2.1 percent at $28.79 after its profit topped analysts’ estimates, rounding off upbeat results from the six biggest Wall Street banks.

The stock market’s record-setting rally had so far been driven by defensive stocks such as telecoms and consumer staples. Investors are keeping a sharp eye on corporate earnings to see if other sectors can help sustain the momentum.

“The market has been rallying on the expectation of good earnings with some companies even providing decent forecasts,” said Thomas Wilson, managing director of wealth advisory at Brinker Capital.

At 10:53 a.m. ET (1453 GMT) the Dow Jones industrial average was up 40.88 points, or 0.22 percent, at 18,599.89. It hit a record intraday high of 18,618.93.

The S&P 500 was up 9.45 points, or 0.44 percent, at 2,173.23, easing slightly after hitting an all-time intraday high of 2,174.25.

The Nasdaq Composite was up 49.01 points, or 0.97 percent, at 5,085.38.

Second-quarter earnings estimates have eased. Profits at S&P 500 companies are now expected to fall by 4.3 percent, less than the 4.5 percent decline estimated earlier, according to Thomson Reuters I/B/ E/S.

Disney fell 1.7 percent to $97.78 after a Stifel rating downgrade. The stock was the biggest drag on the S&P and the Dow.

Intel, eBay and American Express are scheduled to report results after the bell. All three stock were up under 1 percent.

Advancing issues outnumbered decliners on the NYSE by 1,902 to 882. On the Nasdaq, 1,841 issues rose and 720 fell.

The S&P 500 index showed 37 new 52-week highs and no new lows, while the Nasdaq recorded 68 new highs and 13 new lows.

EU

Eurozone stock markets moved higher Wednesday as investors hoped for hints of extra stimulus from the European Central Bank, while a clutch of US company earnings boosted US stocks.

“Equities have found renewed bullish gusto... as investors contemplate upcoming central bank action,” said Mike van Dulken, head of research at traders Accendo Markets.

Outside the eurozone, London shares also closed higher, as dealers digested news that Britain’s unemployment rate sat at a 11-year low of 4.9 percent, as the dust settles on its shock decision to exit the EU.

Frankfurt and Paris meanwhile notched up emphatic gains.

After three days of losses, France’s CAC 40 rallied to close 1.2 percent up, while Germany’s DAX was 1.6 percent firmer.

Analysts expect the ECB to hold fire on monetary policy Thursday but to likely prepare the ground for more stimulus in September, as the economic fallout from Brexit becomes clearer.

The central bank meeting takes place one month after the Brexit vote.

He noted however that the FTSE has traded relatively flat ever since the Bank of England left its key interest rate unchanged last week, confounding expectations for a cut.

The boe did however flag a likely rate reduction for August.

Solid earnings from Microsoft helped propel US stocks higher, taking the Dow Jones Industrial Average past its all-time high.

The index has closed at a new record on each of the last six trading days.

Fawad Razaqzada, analyst at FOREX. com, said European markets had been “far less buoyant due to the economic stagnation, troubles with Italian banks, Brexit, a rapid rise in terrorist threats and so on”.

Elsewhere, Japanese stocks fell, also after six straight days of gains, while most other Asian markets moved cautiously, a day after a cut in the International Monetary Fund’s world growth forecast.

Asia

Japanese stocks finally fell Wednesday after six straight days of gains, and most other Asian markets moved cautiously following weak leads from New York and Europe and a cut in the IMF’s world growth forecast.

The Nikkei in Tokyo had surged more than 10 percent during its rally -- fuelled by hopes for stimulus measures as well as a weaker yen -- and investors decided it was time to cash in. The index ended down 0.3 percent. While the Dow on Wall Street closed at another record, the broad lead from Europe and New York was tepid after the International Monetary Fund lopped 0.1 percentage point off its outlook for the global economy for both this year and next.

The Fund pointed to last month’s shock vote for Britain to leave the European Union, saying it had darkened the skies in that country and across the euro area and dented an already fragile recovery.

Asian markets moved more cautiously than they have in the past week, although confidence that central banks will introduce more monetary easing measures is providing some support.

Hong Kong added one percent, having fallen Tuesday for the first time after a sixsession winning streak.

Sydney ended up 0.7 percent but Shanghai shed 0.3 percent and Seoul was 0.1 percent lower.

In early European trade London rose 0.4 percent, Frankfurt added 0.7 percent and Paris put on 0.6 percent.

However, Stephen Innes, senior trader at OANDA Asia Pacific, said the upward momentum would likely continue as dealers await central bank moves.

Speculation that Japan’s government and central bank will step up their stimulus drive -- along with expectations of a US interest rate rise this year -- is keeping pressure on the yen.

Oil

Brent oil prices edged higher before falling on Wednesday in muted trading as investors awaited a clearer signal from weekly US crude inventory data on whether a glut was easing in the world’s largest oil-consuming nation.

Global benchmark Brent crude prices were up 5 cents at $46.71 a barrel at 1225 GMT. On Tuesday, the contract settled down 30 cents, or 0.6 percent.

In thin trading, US West Texas Intermediate (WTI) crude was down 13 cents at $44.52 a barrel. It fell 59 cents, or 1.3 percent, in the previous session. The front-month August contract will expire at the end of Wednesday’s session, meaning trading interest was low.

The US government’s Energy Information Administration (EIA) will issue stockpile data at 1430 GMT.

If the EIA confirms a drawdown, it will be the ninth straight week in which US crude stockpiles have fallen.

The American Petroleum Institute, an industry group, reported on Tuesday that crude stockpiles fell by 2.3 million barrels last week. That was just above a 2.1-million-barrel draw forecast in a Reuters poll.

For distillate inventories including diesel, API reported a surprise draw of 484,000 barrels. But it also showed an unexpected gasoline build of 805,000 barrels.

He told Reuters in an interview that Russia was not discussing coordination with producer group OPEC and that Russian oil output would rise to 542-544 million tonnes this year, a 30-year high.

Libya’s eastern oil export terminal of Hariga resumed operations on Wednesday after a protest by guards over pay ended.

Gold

Gold fell to its lowest in three weeks on Wednesday on higher equities and as the dollar hit a four-month high following strong US economic data, which raised expectations that the Federal Reserve may raise rates before the end of the year.

Spot gold fell as much as 1.4 percent to $1,313.20 an ounce earlier and by 1450 GMT was down 1 percent at $1,319.06.

The dollar hit its highest for four months, still benefitting from data on Tuesday showing US housing starts surged more than expected in June, underpinning a theme of strength in the US economy.

“As the the probability of a Fed rate hike by the end of the year has now increased, speculators are taking profits after the good rally we have seen in gold in early July,” Commerzbank analyst Daniel Briesemann said.

Gold, which has risen 25 percent this year, is highly sensitive to rising rates, which increase the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.