Global equities rise on Trump tax hopes, French vote relief

Oil dips on doubts over OPEC’s ability to reduce glut

NEW YORK, April 25, (Agencies): Equity markets continued their advance on Tuesday and a gauge of world stocks notched a record for a second straight session, spurred by speculation about US tax reform and relief at French election results.

Wall Street built on gains in the prior session, with the Nasdaq Composite index breaching the 6,000 mark for the first time.

With concern over French elections on the wane, investors turned their focus to corporate earnings and US President Donald Trump’s promise to announce “a big tax reform and tax reduction” on Wednesday.

The Dow Jones Industrial Average rose 241.14 points, or 1.16 percent, to 21,005.03, the S&P 500 gained 14.57 points, or 0.61 percent, to 2,388.72 and the Nasdaq Composite added 37.92 points, or 0.63 percent, to 6,021.73.

The pan-European FTSEurofirst 300 index rose 0.27 percent and MSCI’s gauge of stocks across the globe gained 0.62 percent after touching a high of 456.34.

French shares were up 0.2 percent, after a 4.1 percent surge on Monday, their biggest daily gain since August 2012. The euro added to Monday’s gains against the dollar, up 0.6 percent to $1.0932.

The Canadian dollar fell 0.8 percent to C$1.3611 per US dollar after the United States announced new duties averaging 20 percent on Canadian softwood lumber imports.

The Japanese yen weakened 1.08 percent versus the greenback at 110.98 per dollar, while Sterling was last trading at $1.2838, up 0.35 percent on the day.

Gold, also seen as a safe-haven asset, fell. Spot gold dropped 0.6 percent to $1,267.18 an ounce. US gold futures fell 0.65 percent to $1,269.20 an ounce.

Oil prices continued to slump as doubts about OPEC’s ability to reduce global crude inventories put the price on track for its six fall in seven days.

US crude fell 0.26 percent to $49.10 per barrel and Brent was last at $51.57, down 0.06 percent on the day.

US

The Nasdaq crossed the 6,000 threshold for the first time on Tuesday, while the Dow registered triple-digit gains as strong earnings underscored the health of Corporate America.

The tech-heavy Nasdaq rose as much as 0.70 percent to hit a record level of 6,026.02, powered by gains in index heavyweights Apple and Microsoft.

The index had breached the 5,000 mark on March 7, 2000 and closed above that level two days later during the height of the tech boom.

At 12:49 p.m. ET (1649 GMT), the Dow Jones Industrial Average was up 235.96 points, or 1.14 percent, at 20,999.85, the S&P 500 was up 13.17 points, or 0.55 percent, at 2,387.32 and the Nasdaq Composite was up 39.91 points, or 0.67 percent, at 6,023.73.

Investors are also keeping a close watch on the latest earnings season, hoping that companies will be able to justify their lofty valuations, which were spurred in part by President Donald Trump’s pro-growth promises.

Overall profits of S&P 500 companies are estimated to have risen 11 percent in the first quarter - the most since 2011, according to Thomson Reuters I/B/E/S.

The Dow outperformed other major sectors, largely due to a surge in Caterpillar and McDonald’s after they reported better-than-expected profits.

Eight of the S&P 500’s 11 major sectors were higher. DuPont’s 2.8 percent increase, following a profit beat, helped the materials sector top the list of gainers.

Biogen jumped nearly 4 percent after the biotech company reported better-than-expected quarterly profit and revenue on Tuesday.

Advancing issues outnumbered decliners on the NYSE by 2,017 to 853. On the Nasdaq, 2,020 issues rose and 766 fell. The S&P 500 index showed 80 52-week highs and three lows, while the Nasdaq recorded 194 highs and 36 lows.

UK

British shares edged higher on Tuesday as a strong Europe-wide market rally after the first round of the French election dissipated and investors focused on corporate results which indicated tougher times ahead for consumer goods stocks.

The blue-chip FTSE 100 index ended up 0.15 percent, with financials, energy and healthcare stocks supporting gains. The FTSE’s rise on Monday had been modest compared to European and French benchmarks, with investors flagging obstacles ahead for the UK market.

Whitbread scored its worst day since the Brexit vote last June, ending down 7.2 percent after it indicated a tough market ahead, predicting a dip in consumer confidence this year.

Small-cap Carpetright, Britain’s biggest floor covering retailer, fell 8.1 percent after the firm said full-year profit would be at the lower end of market expectations, also citing tougher trading conditions.

Some of the stocks that rallied most on Monday fell back on Tuesday, with Kingfisher, whose French exposure made it more sensitive to the post-election rally, down 3.2 percent.

Miners Antofagasta, Anglo American and Randgold Resources fell 0.3 to 2.6 percent, holding back the bluechips.

Goldman Sachs cut Anglo American to neutral in a broader downgrade of the mining sector, citing the commodity price outlook.

Europe

Deal-making and earnings underpinned European stock markets on Tuesday as the focus shifted back to fundamentals and away from politics, for now, with the pan-European STOXX 600 index scoring its fifth straight session of gains.

The STOXX 600 ended up 0.2 percent, after briefly hitting its highest level since August 2015 during the session. It is up 7.1 percent so far this year.

France’s CAC 40, which rallied more than 4 percent on Monday, ended up 0.17 percent.

Earnings were firmly in focus, with shares in AMS surging 19.6 percent to a record high after the chipmaker reported first quarter revenues above its own forecast and added that it might raise its mid-term revenue growth target.

Well-received earnings also boosted shares in auto stock Volvo, which rose 7.6 percent after beating first quarter forecasts.

M&A action also fuelled shares, with luxury goods firm Christian Dior rocketing 11 percent to touch a fresh all-time high after a buyout deal.

LVMH and billionaire businessman Bernard Arnault announced a deal to simplify their relationship with Christian Dior by buying out its minority shareholders, aimed at boosting LVMH’s earnings.

LVMH shares hit a record level and rose 3.9 percent higher, while rival Hermes fell 4.5 percent.

Results, however, weighed on Swedish mining and smelting firm Boliden, which fell 6.6 percent.

Boliden’s core operating profit missed forecasts by 6 percent. It blamed a fall in volume of free metals at copper smelters from unusually high levels seen in the previous quarter.

Asia

Asian markets extended gains Tuesday while the euro held up following Emmanuel Macron’s first-round presidential election victory in France, with investors now looking forward to Donald Trump’s promised tax reforms.

US and European markets tracked an Asian advance Monday. On Tuesday the gains continued, with Tokyo and Seoul each jumping more than one percent and Hong Kong up 1.3 percent.

Shanghai, which has suffered a series of losses in the past two weeks on concerns about a government crackdown in leveraged investing, ended up 0.2 percent. Taipei, Mumbai and Manila also posted strong gains.

Sydney and Wellington were closed for a public holiday.

On currency markets the euro, which briefly broke $1.09 Monday for the first time in almost a month, was hovering around $1.0870, while it also held at 119.80 yen, well up from levels around 117 yen before France’s vote.

Key figures at 0810 GMT Tokyo — Nikkei 225: UP 1.1 percent at 19,079.33 (close)

Hong Kong — Hang Seng: UP 1.3 percent at 24,455.94 (close)

Shanghai — Composite: UP 0.2 percent at 3,134.57 (close)

Oil

Oil eased on Tuesday, paring earlier gains, as doubts about OPEC’s ability to reduce global crude inventories put the price on track for its six fall in seven days.

Brent crude was down 3 cents at $51.57 a barrel by 1411 GMT, down from a session high at $51.92, while US crude futures were down 13 cents at $49.10 a barrel.

Brent has fallen by almost 10 percent since late 2016, despite efforts led by the Organization of the Petroleum Exporting Countries and Russia to cut output by 1.8 million barrels per day (bpd) in the first half of 2017.

With oil supplies still around record highs, Stephen Schork of the Schork report said on Tuesday that “OPEC has failed miserably in its endeavour to balance the oil market”.

JPMorgan said in a market note “it is evident that ... crude markets are still struggling to clear (oversupply)”. The bank said it was closing its “August Brent long position at a loss.”

To reduce the supply overhang, JPMorgan said OPEC “will be forced to renew, and possibly deepen the agreement if they wish to keep prices much above $50 per barrel”.

Russia said at the weekend its oil output could climb to the highest rate in 30 years if OPEC and non-OPEC producers do not extend their supply reduction deal beyond June 30.

Extreme weakness in physical crude, where prices in the North Sea market have fallen to their lowest this year, is also acting as a drag on futures.

But one analyst said crude demand could pick up and the long-awaited draw in global inventories could start to show with refinery maintenance around Europe and Russia set to peak in May at an estimated 1.5 million bpd.

Gold

Gold prices fell on Tuesday as markets became less concerned that far-right leader Marine Le Pen would win the French presidential election, increasing investor appetite for risky assets such as stocks while denting bullion.

Spot gold was down 0.5 percent at $1,269.20 per ounce at 1355 GMT.

US gold futures slipped 0.4 percent to $1,272. Business-friendly centrist Emmanuel Macron won the first round of the French vote on Sunday and opinion polls indicated less support for Le Pen.

The news sent bullion prices to their lowest since April 11 at $1,265.90 in the previous session.

Holdings of SPDR Gold, the world’s largest gold-backed exchange-traded fund, rose 0.17 percent to 860.17 tonnes on Monday. Holdings have risen six tonnes in the past two sessions, indicating investor interest in the perceived safe-haven asset.