Global stocks edge up; dollar yields dip on soft US inflation

Oil gives up gains as investors book profit

NEW YORK, May 10, (Agencies): The US dollar slid and US government debt yields fell on Thursday as a modest rise in consumer prices in April damped expectations that faster inflation could lead the Federal Reserve to boost interest rates more than expected in 2018.

The US Labor Department said its Consumer Price Index rose 0.2 percent last month, less than forecasts for 0.3 percent, as a moderation in healthcare prices offset increases in the cost of gasoline and rental accommodations.

The dollar fell against the euro, the Japanese yen and a basket of other major currencies, while the Mexican peso and Brazilian real jumped about 1 percent on the news.

Benchmark 10-year US Treasury notes rose 8/32 in price to push yields down to 2.964 percent after breaching 3 percent on Wednesday.

MSCI’s broad gauge of global equity markets rose 0.51 percent and turned positive for the year as it hit three-weeks highs.

Chinese internet giant Tencent, Apple, Microsoft and Facebook led the index’s advance, while the US technology sector lifted Wall Street.

Emerging market stocks rose 1.26 percent, while Asia-Pacific shares outside Japan and the Nikkei in Tokyo both earlier closed higher.

The pan-European FTSEurofirst 300 index of leading regional shares fell 0.25 percent, but shares in London, Germany and France were higher.

On Wall Street, the Dow Jones Industrial Average rose 154.43 points, or 0.63 percent, to 24,696.97. The S&P 500 gained 15.07 points, or 0.56 percent, to 2,712.86 and the Nasdaq Composite added 45.80 points, or 0.62 percent, to 7,385.70.

Oil prices were in flux and gave up earlier gains as investors took profit on a rally triggered by the potential disruption to crude flows from major exporter Iran in the face of US sanctions.

Brent crude futures were down 0.08 percent at $77.13 a barrel, after hitting $78 earlier in the day, their highest since November 2014.

US West Texas Intermediate crude futures were last up just 0.04 percent at $71.18.

US

US stocks rose sharply on Thursday, with the benchmark S&P 500 topping a key technical level for the second straight day, after tepid inflation data eased worries of faster interest rate hikes this year.

The markets, after remaining subdued in the past few weeks on fears of rising inflation and its fallout, rallied broadly with all 11 major S&P sectors posting gains.

Technology stocks were the biggest boost to the S&P 500 on Apple’s 1.4 percent rise to a record high.

The S&P 500 reclaimed its 100day moving average for the first time since April 19. That came a day after it topped its 50-day average, a key indicator of short-term momentum.

At 12:40 pm ET, the Dow Jones Industrial Average was up 234.65 points, or 0.96 percent, at 24,777.19, the S&P 500 was up 26.24 points, or 0.97 percent, at 2,724.03 and the Nasdaq Composite was up 65.76 points, or 0.90 percent, at 7,405.67.

CenturyLink gained 8 percent, the most on the S&P, after its first-quarter results. That helped the telecoms sector rise 1.56 percent, the most among the 11 sectors.

AXA Equitable Holdings, the US division of French insurer AXA, slipped 0.5 percent in its market debut. Although its offering raised less than targeted, it was still the biggest US IPO this year.

The top losers on the S&P 500 included Victoria’s Secret owner L Brands, which fell 8.6 percent, and Booking Holdings, formerly called Priceline, which dropped 5.3 percent. Both companies gave disappointing outlooks.

Advancing issues outnumbered decliners for a 3.13-to-1 ratio on the NYSE and for a 2.19-to-1 ratio on the Nasdaq.

The S&P index recorded 34 new 52-week highs and two new lows, while the Nasdaq recorded 135 new highs and 20 new lows.

Europe

The UK’s top share index hit a fresh 3-1/2 month high on Thursday after a decision by the Bank of England to keep rates on hold pushed sterling lower, while shares in Royal Bank of Scotland surged after it settled a probe in the United States.

The FTSE index closed 0.5 percent higher at 7,700.97 points, outperforming a slightly negative European market.

Sterling dropped after the Bank of England held interest rates steady as expected, but trimmed some losses after Governor Mark Carney told the BBC that he expected a rate rise over the course of the next year if there are no shocks to the economy.

Weakness in the pound against a surging dollar has been supporting the FTSE recently, helping the internationally-exposed index recover from losses suffered at the start of the year.

Away from economics, the FTSE was boosted by a 3.8 percent move higher in RBS’ shares after it agreed to pay a smaller-than-expected $4.9 billion to resolve a US investigation into its sale of mortgage-backed securities.

Next’s shares were the biggest risers, up more than 6 percent after a strong outlook and trading update, while ITV jumped after saying that advertising growth was in-line in the first quarter. BT, however, fell 7.4 percent. Traders said its latest update showed a disappointing guidance, while Jefferies analysts highlighted that the company missed on the opportunity of announcing a bolder mover of fiber roll out while the 13,000 job cuts were bigger then expected.

Randgold was another weak spot, down 7 percent after its quarterly profit fell, while

Among mid-caps, Superdry plummeted more than 19 percent after the fashion retailer said it expected 2018 full-year gross margins to decline and it gave a weaker than expected revenue forecast for 2019.

Asia

Crude prices extended their rally Thursday, propelling Asian energy firms and equity markets, as rising demand and Donald Trump’s decision to tear up the Iran nuclear deal point to a thinning of supplies.

Both main oil contracts, which rose around three percent on Wednesday, were almost one percent up in Asia.

The gains fed into energy firms with Woodside Petroleum surging 5.1 percent in Sydney, CNOOC almost three percent in Hong Kong and Tokyo-listed Inpex piling on 3.4 percent.

Stock markets were also benefiting.

Hong Kong rose 0.9 percent marking a fourth straight gain, while Shanghai finished 0.5 percent higher and Tokyo ended up 0.4 percent.

Sydney added 0.2 percent and Seoul was 0.8 percent higher, while Wellington, Taipei and Manila were deep in positive territory. Singapore was flat.

Malaysian markets were closed for the general election.

Key figures around 0810 GMT Tokyo — Nikkei 225: UP 0.4 percent at 22,497.18 (close)

Hong Kong — Hang Seng: UP 0.9 percent at 30,809.22 (close)

Shanghai — Composite: UP 0.5 percent at 3,174.41 (close)

Dollar/yen: UP at 109.93 yen from 109.72 yen

Oil

Crude oil fell on Thursday, giving up earlier gains as investors took profit on a rally triggered by potential disruption to oil flows from major exporter Iran in the face of US sanctions.

The United States said on Tuesday that it plans to impose new sanctions against Iran after abandoning an agreement reached in late 2015 that curbed Tehran’s nuclear activities in exchange for removal of US and European sanctions.

Brent crude futures fell 29 cents to $76.92 a barrel by 1432 GMT, having risen earlier in the day to $78, their highest since November 2014.

US West Texas Intermediate crude futures were last down 18 cents at $70.96.

“If you accept the fact that after Tuesday’s decision the general mantra was that the oil market will stay volatile, then here we are ... price movement right now is pretty unpredictable,” said PVM Oil Associates strategist Tamas Varga.

The oil price was still on track for its fourth consecutive quarterly gain, the longest such stretch for more than 10 years.

Analysts had little hope that opposition to the US action would prevent sanctions from going ahead.

Gold

Gold rose on Thursday as the dollar edged away from 2018 highs after weaker than forecast US inflation data and as simmering tensions between the United States and Iran lent the precious metal further support.

The dollar slipped from a 4-1/2 month peak after US data showed the consumer price index rose 0.2 percent in April versus forecasts for a 0.3 percent increase. A weaker dollar makes dollar-priced gold cheaper for non-US investors.

Also helping gold, viewed as a safe-haven investment, was US President Donald Trump’s move on Tuesday to withdraw from a nuclear accord with Iran, raising the risk of conflict in the Middle East.

Israel said on Thursday that it had attacked nearly all of Iran’s military infrastructure in Syria after Tehran fired rockets at Israeli-held territory for the first time.

“We’ve seen a (dollar rally) in the last few weeks, but actually gold hasn’t gone down as far as you might think, so political tensions are helping,” said Macquarie commodities strategist Matthew Turner.

Turner added, however, that the dollar was the main driver for gold and he expects the precious metal to come under pressure in the near term, with the dollar extending its rally.