Big week for US dollar, records on Wall Street as quarter ends
Britain’s FTSE rises as sterling retreats; Asia exchanges up
NEW YORK, Sept 30, (Agencies): The dollar was poised for its strongest week of the year on Friday, while world stock markets climbed back near recordhigh levels on the last trading day of the quarter.
On Wall Street, the S&P 500 and Nasdaq minted all-time highs, while European stock markets also gained.
Firming expectations for another US interest rate increase by year-end, combined with US President Donald Trump’s tax-cut plan, have dominated markets for most of the week.
Data on Friday showed US consumer spending barely rose in August but the report did little to change expectations that the Federal Reserve would raise interest rates again in December. Another report showed the Chicago purchasing management index, which gauges factory activity, came in better than expected for September.
The Dow Jones Industrial Average rose 23.89 points, or 0.11 percent, to 22,405.09, the S&P 500 gained 9.3 points, or 0.37 percent, to 2,519.36 and the Nasdaq Composite added 42.51 points, or 0.66 percent, to 6,495.96.
The S&P technology sector led the way, rising 0.8 percent.
The dollar index, which measures the greenback against a basket of currencies, fell 0.01 percent. The US currency was up about 1 percent for the week, on track for its best week since December.
The euro was up 0.26 percent to $1.1815.
“Economically, the situation in the US merits the fact that the dollar has gained,” said Juan Perez, currency strategist at Tempus Inc in Washington.
Most US Treasury yields edged higher, marking the end of a choppy third quarter, as investors weighed the chances of the Fed raising rates in December and Washington’s implementation of tax cuts and other fiscal changes.
Benchmark 10-year notes last fell 8/32 in price to yield 2.3354 percent, from 2.307 percent late on Thursday.
US crude rose 0.06 percent to $51.59 per barrel and Brent was last at $56.68, down 0.84 percent on the day.
Spot gold dropped 0.5 percent to $1,280.15 an ounce.
Both the S&P 500 and Nasdaq ended at records, with technology shares especially strong.
Money managers have been cheered by the release of President Donald Trump’s tax cut plan, as well as expectations of solid earnings.
Analysts estimate companies in the S&P 500 will report a 4.2 percent rise in profits in the third quarter compared with a year ago, according to Factset. Earnings season gets started in earnest in about two weeks.
“The buzz about a tax cut bill and the possibility of a solid earnings season on the way has investors putting sidelined capital to work,” said a note from Gorilla Traders strategist Ken Berman.
European equities also pushed higher, with Frankfurt winning 1.0 percent and London and Paris both gaining 0.7 percent.
“It’s a risk-on end to the week, in Europe anyway,” said Accendo Markets analyst Mike van Dulken.
William Hamlyn, investment analyst at Manulife Asset Management, said European investors were waiting to see whether the eurozone’s economic strength would translate into higher corporate profits as the quarterly earnings season gets underway.
“Economic activity and corporate earnings generally looks robust, and investors will be waiting for confirmation of that (in) third-quarter results,” he told AFP.
“We will also be waiting for clarification of the European Central Bank’s intentions.”
The Frankfurt-based ECB has strongly hinted that it will begin winding down bond-buying in October, although inflation in the eurozone remains well short of its target.
Britain’s FTSE edged up on Friday as sterling weakened on poor economic data but was set, unlike continental exchanges, for a monthly loss as the pound’s recovery in September hit its dollar-earning constituents.
Sterling fell half a percent after data showed GDP growth for the second quarter was revised downwards and the current account deficit blew past expectations, raising doubts that the Bank of England will follow its hawkish rhetoric this month by actually raising rates.
The British blue chip index was up 0.6 percent in early trading, with miners contributing most with rises across all sectors.
Glencore, Rio Tinto, BHP Billiton and Anglo American were up between 1.1 and 1.3 percent.
Aviva was up 1.3 percent after it agreed to sell its Italian joint venture to Banco BPM for 265 million euros in cash.
Insurer Beazley jumped 3.9 percent after it reckoned its losses from hurricanes Harvey, Irma and Maria and a series of earthquakes in Mexico would reduce its 2017 earnings by about $150 million, less than analysts had earlier expected.
Trump’s long-awaited tax cut plans buoyed most Asia-Pacific exchanges Friday, extending global gains, but a rise in the yen held back Japan’s benchmark index.
The broad rise from Shanghai to Sydney came on the back of Trump unveiling proposals that included cutting the corporate tax rate from 35 percent to 20 percent.
His market-friendly promise to reduce taxes, ramp up infrastructure spending and slash red tape helped drive a global rally in the months after his November election win.