Equities gain amid benign US inflation; dollar slips vs peers

European shares score longest weekly winning streak in 3 yrs

NEW YORK, May 12, (Agencies): The US dollar eased on Friday while an index of global stock performance gained and was poised for its best week since early March, as moderate inflation eased worries about a faster pace of US interest rate hikes and boosted risk appetite.

The dollar fell for a third day against a basket of major currencies as traders booked recent gains, which were tied to widening interest rate gaps in favor of the United States and signs of slower growth elsewhere in the world.

Gold posted its first weekly gain in four weeks after soft US inflation data on Thursday suggested the Federal Reserve would show caution as it tightens monetary policy by raising rates.

Oil prices slipped but remained near 3-1/2 year highs as the prospect of new US sanctions against Iran might reduce Middle East supply at a time when global crude production is just keeping pace with rising demand.

US stocks gained as healthcare shares rallied even after President Donald Trump blasted drugmakers and healthcare “middlemen” for making prescription drugs unaffordable for Americans. Trump also said the pharmaceutical industry makes an “absolute fortune” at the expense of taxpayers.

The S&P healthcare index rose 1.47 percent as it became clear the Trump administration had avoided taking aggressive and direct measures to cut drug prices.

The market is responding to exceptionally strong earnings growth and benign inflation, said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York.

The Cboe Volatility Index, a barometer of expected near-term volatility for the S&P 500 that often is referred to as Wall Street’s fear gauge, has fallen to levels last seen before the February market correction, he said.

MSCI’s gauge of stock markets across the globe rose 0.42 percent to advance 2.1 percent for the week, its best weekly gain since early March.

European shares edged higher. The pan-regional STOXX 600 index of companies in 17 countries closed up 0.11 percent for a seventh straight week of gains, the longest string of weekly advances since March 2015.

The Dow Jones Industrial Average rose 0.37 percent to end at 24,831.17 points, while the S&P 500 gained 0.17 percent to 2,727.72, its highest close since mid-March. The Nasdaq Composite slipped 0.03 percent to 7,402.88.

For the week, the Dow rose 2.3 percent, the S&P 500 added 2.4 percent, and the Nasdaq climbed 2.7 percent.

During Friday’s session, the Dow

edged above 100-day moving average for the first time since April 18, following the S&P 500’s similar move a day earlier. Some traders believe such developments mean the market is likely to move higher.

Volume on US exchanges was 5.8 billion shares, light compared with the 6.6 billion-share average over the last 20 trading days.

With March-quarter reports mostly wrapped up, S&P 500 companies appear to have grown their earnings per share by 26 percent, according to Thomson Reuters I/B/E/S.

Due to increased expectations for corporate profits and a dip in stock prices since January, the S&P 500 is now trading at 16 times expected earnings, its lowest multiple in two years, according to Thomson Reuters Datastream.

Boosting the Dow was Verizon, which rose 3 percent after JPMorgan

upgraded the wireless carrier to “overweight,” saying 5G opportunity will start to crystallize in the next few months.

Symantec slumped 33 percent after the Norton Antivirus maker said it was investigating concerns raised by a former employee.

Advancing issues outnumbered declining ones on the NYSE by a 1.24to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favored advancers.

The S&P 500 posted 30 new 52week highs and three new lows; the Nasdaq Composite recorded 137 new highs and 51 new lows.

European stocks achieved their longest weekly winning streak for more than three years on Friday as M&A activity added to an advance on the back of a busy earnings season.

Shares traded in a narrow range, with the pan-European STOXX 600

index ending up 0.1 percent, scoring its seventh straight week of gains and the longest winning streak since March 2015. Germany’s DAX fell 0.2 percent while Britain’s FTSE 100 added 0.3 percent.

Though moves at the index level were muted, shares in Sika soared 8.3 percent to the top of the STOXX after the Swiss chemicals company reached an agreement with French building materials firm Saint-Gobain to end a longstanding legal dispute.

Saint-Gobain, whose shares rose 2.7 percent, is to take a large stake in Sika, but not majority control.

Shares in Daily Mail and General Trust (DMGT) rose 1.4 percent after US-based private equity firm Silver Lake Management Company agreed to buy ZPG, the owner of British property websites Zoopla and PrimeLocation, for 2.2 billion pounds.