Stocks gain, euro jumps
Major world stock markets rose to their highest levels in nearly two years yesterday helped by manufacturing and employment data indicating the global economic recovery is on track.
The euro rose to its highest level against the US dollar in since mid-November 2011 after data showed eurozone factories had their best month in January in nearly a year.
The yen fell to a two and a half year low against the dollar and a 33-month trough versus the euro, extending its recent weakness on bets the Bank of Japan will ease monetary policy further.
The MSCI world equity index was up 0.7 per cent, helped by surveys indicating Chinese factory output was recovering while German industrial output posted its best month in nearly a year, though the eurozone as a whole continued to struggle.
US data showed employment grew modestly in January and factory activity touched a nine-month high. Payrolls rose by 157,000 in January and revisions showed 127,000 more jobs created in November and December than previously reported. Other data yesterday also suggested that the surprise contraction in economic activity in the last three months of 2012 was largely a fluke, not a trend.
The Dow Jones industrial average was up 140.29 points, or 1.01 per cent, at 14,000.87. The Standard & Poor’s 500 Index was up 15.01 points, or 1.00 per cent, at 1,513.12. The Nasdaq Composite Index was up 38.05 points, or 1.21 per cent, at 3,180.19. The gains are on the fastest start to the year for equities in 16 years.
European shares inched up yesterday, as investors took advantage of the past two sessions’ losses to snap up equities more cheaply, reassured by the run of solid data from China, Europe and the United States.
The pan-European FTSEurofirst 300 closed 0.3 per cent higher at 1,168.08 points, clawing back some of the retreat suffered in the previous two sessions and edging towards a two-year peak of 1,178.55 set earlier in the week.
The euro was up 0.6 per cent at $1.3664 with its session high at $1.3711. The common currency also hit its highest point against the yen since April 2010 , helped by the factory activity data showing the worst of the euro zone’s downturn may be ver.
Gold was up 0.4 per cent at $1,669.04 an ounce although it pared gains in the wake of the US payrolls data. Silver was up 1.4 per cent at $31.86 an ounce and three-month copper on the London Metal Exchange rose to $8,309.75 a tonne, its highest since October.
In the oil market the rising economic optimism coupled with tension across the Middle East, the world’s biggest oil producing region, has put Brent crude on track to its biggest weekly gain since mid November, while US crude is set to rise for an eighth straight week. Brent oil was up one percent to $116.71, while US crude futures rose 6 cents to $97.56 a barrel.