Global equities extend spate of record highs, dollar eases

Oil prices ease; gold hits seven-week low

NEW YORK, Oct 3, (Agencies): World shares extended a run of record highs on Tuesday on signs of strong economic growth, while the dollar was slightly weaker against the euro as investors squared positions after a three-week rally and before several days of heavy US data.

MSCI’s gauge of world stock performance hit a fresh all-time high, the three major stock indexes on Wall Street hit new record highs and overnight in Tokyo stocks hit two-year highs.

The gain in the MSCI benchmark was the tenth record high since late July and extended the year’s bevy of records to more than 40 with little indication the run is about to lose steam.

European shares closed higher at more than three-month highs as a selloff in Spanish stocks eased and financials gained.

Investors want to know if the equity bull market has peaked but with earnings still growing shares can continue to go up, said Frances Hudson, global thematic strategist at Aberdeen Standard Investments in Edinburgh.

In the latest sign of economic growth, Delta Air Lines reported that its “cargo ton miles” metric rose 9.4 percent in September from a year earlier.

While margins deteriorated because of Hurricanes Harvey and Irma, cargo revenue was a bright spot for Delta, Cowen & Co. reported. Delta shares rose almost 6 percent, the fourth-largest contributor to gains in the benchmark S&P 500 index.

The Dow Jones Industrial Average rose 68.57 points, or 0.3 percent, to 22,626.17. The S&P 500 gained 2.52 points, or 0.10 percent, to 2,531.64 and the Nasdaq Composite added 8.19 points, or 0.13 percent, to 6,524.91.

The pan-European FTSEurofirst 300 index rose 0.19 percent and MSCI’s gauge of stock performance in 47 countries gained 0.28 percent.

The dollar rose slightly against the Japanese yen, but slipped against the euro.

The dollar index was flat, with the euro up 0.19 percent to $1.1752 as the yen weakened 0.07 percent versus the greenback at 112.86 per dollar.

Stronger US data along with the prospect of US tax cuts and the likelihood of a further interest rate hike in December have boosted the US currency in recent weeks.

Oil prices dipped as speculators took profits for a second day after big third-quarter gains, but prospects for reducing the global crude glut lent support.

Brent was last at $55.84 per barrel, down 28 cents on the day while US crude fell 25 cents to $50.33.

US Treasury debt yields were slightly lower in volatile trading as market sentiment remained cautious.

Benchmark 10-year notes last rose 3/32 in price to yield 2.3283 percent.

US

US stock indexes touched new record highs on Tuesday, boosted by a rally in tech stocks and gains in Ford Motor and General Motors after strong September vehicle sales.

Eight of the 11 major S&P indexes were higher, led by technology and consumer discretionary sectors.

Major automakers posted higher US new vehicle sales in September, as consumers in hurricane-hit parts of the country rushed to replace flood-damaged cars.

General Motors’ shares rose 3.7 percent to a record high of $43.70, while Ford’s stock was up 2.3 percent at $12.37.

Technology stocks have rebounded from a sharp selling seen last week, with Apple and Intel supporting Tuesday’s gains. The sector has been the biggest gainer year-to-date, up 26 percent so far.

Third-quarter earnings for S&P 500 companies are expected to increase 5.5 percent from a year earlier, according to Thomson Reuters research, after rising a better-than-expected 12.3 percent in the second quarter.

The indexes have been scaling record highs and on Monday found support from factory data that pointed to underlying strength in the US economy.

The encouraging data helped world shares touch their latest record highs on Tuesday, while lifting the dollar to its loftiest in 1-1/2 months.

At 12:25 a.m. ET, the Dow Jones industrial average was up 67.17 points, or 0.3 percent, at 22,624.77, the S&P 500 was up 2.45 points, or 0.10 percent, at 2,531.57.

The Nasdaq Composite was up 7.64 points, or 0.12 percent, at 6,524.36.

Tesla Inc was down 2 percent after the luxury electric vehicle maker said its planned ramp-up for the new Model 3 mass-market sedan faced production bottlenecks.

Lennar Corp’s shares rose about 3 percent following a higher-thanexpected quarterly profit from the No.2 US homebuilder.

Declining issues outnumbered advancers on the NYSE by 1,425 to 1,375. On the Nasdaq, 1,402 issues fell and 1,398 advanced.

UK

Britain’s top share index climbed to a near eight-week high on Tuesday, boosted by a slide in the pound after weaker construction sector activity and rumbling uncertainty over Brexit negotiations.

The blue-chip FTSE 100 index ended the day up 0.4 percent, outperforming European markets.

The pound’s tumble to a three-week low drove gains in the index dominated by foreign-earning international firms.

Construction sector activity fell in September, and comments from Brexit minister David Davis at the ruling Conservative Party conference added to uncertainty for sterling traders.

Shrugging aside party conference news and Brexit-related speeches, Turner said: “We choose to focus on the macroeconomic picture which for UK equities is seeing the post-Brexit trend of weaker performing pound, stronger performing FTSE 100, come to an end.”

Corporate news also supported the index on the day.

Heating and plumbing product supplier Ferguson jumped 4 percent to the top of the FTSE after reporting a rise in trading profit and a 500 million pound share buyback plan.

Retailers were some of the top gainers, with Sainsbury up 3.5 percent and Tesco up 2.1 percent.

Berenberg initiated coverage of Sainsbury with a “buy”, naming the retailer its top pick in a sector it said was facing intensifying competitive and cost pressures.

Advertising giant WPP was among the worst performers, down 2.1 percent after Morgan Stanley sold 22.5 million shares. The agency’s shares are down nearly 25 percent since the beginning of the year.

BAE Systems was also among the biggest losers, retreating 1.7 percent after a downgrade by Berenberg, whose analysts said they expect no organic revenue growth and modest earnings progression in the next two years.

Europe

European stock markets ended the session higher Tuesday, underpinned by firmer prices on Wall Street as investors remain optimistic about third-quarter earnings, traders said.

After Asian stocks had risen strongly earlier, Europe tracked Wall Street higher, with London and Paris both ending the session with gains of more than 0.3 percent, while Frankfurt was shut for a German public holiday.

Asia

Asian markets gained Tuesday, with Tokyo closing at a two-year high following fresh records on Wall Street, as investors were cheered by the release of strong economic data.

Tokyo’s benchmark Nikkei 225 index rose 1.05 percent to finish at 20,614.07 on Tuesday, its best close since August 2015, with a weaker yen boosting Japanese exporters.

Hong Kong closed 2.25 percent higher after a long weekend while Manila gained 0.6 percent and Sydney edged down 0.4 percent.

The weaker yen lifted Japanese automakers and other exporters despite an announcement from Nissan late Monday it was recalling some 1.2 million cars in Japan that had failed to meet domestic rules on vehicle inspections.

The gains came after the Bank of Japan’s Tankan survey showed business confidence in the world’s thirdlargest economy had hit its highest level in a decade.

“Global growth, folks, global growth. That’s the economic story of the night as the raft of manufacturing PMIs released in the past 24 hours tell the story of a continuation of this trend toward synchronisation and strength,” said Greg McKenna, chief market strategist at AxiTrader.

“Gold continues to fall as the global economy grows... (and) as risk aversion wanes,” he added.

Oil

Oil eased on Tuesday, as speculators took profits on some large positions that have built up in the last couple of weeks, but the prospect of gradually ebbing oversupply lent support.

December Brent crude futures were down 27 cents at $55.85 a barrel at 1315 GMT, having lost almost 2.5 percent on Monday. US crude futures fell 24 cents to $50.34.

Brent notched up a third-quarter gain of about 20 percent, the biggest increase for that quarter since 2004, and traded as high as $59.49 last week, but has since fallen about 6 percent.

Money managers have pushed their bullish bets on the Brent crude market to a record high in the last week, encouraged by signs of rebalancing between supply and demand.

But when positioning becomes too stretched, this can lead to abrupt shifts in the price.

Gold

Gold touched its lowest price level in seven weeks on Tuesday after strong US economic data reinforced expectations of another interest rate rise in the United States this year and pushed the dollar and US bond yields higher.

The CME’s Fedwatch indicator showed markets were pricing in a 77 percent likelihood of a December rate rise after Monday’s data showed a surge in US manufacturing activity.

US and world stocks also rose to new records as a positive global growth outlook encouraged investment in riskier assets.

A strong dollar makes gold more expensive for holders of other currencies, while higher bond yields reduce the appeal of non-yielding gold.

Spot gold was up 0.1 percent at $1,272.05 an ounce at 1430 GMT after the dollar and US bond yields weakened from earlier highs. But the gold price earlier touched $1,267.76, its lowest level since Aug. 15 and down more than 6 percent from a one-year high of $1,357.54 in early September.