World stock markets edged up for a sixth straight session yesterday after upbeat trade data from China, while the British pound rose to a two-week high against the dollar.
US stocks were little changed, with a decline in Procter & Gamble keeping gains in check.
Chinese trade data showed solid demand, easing fears that the world’s second-largest economy is mired in a worsening slowdown and reviving investors’ appetite for emerging market assets that had been battered in recent weeks.
The broad MSCI All-Country World Index was up 0.2 per cent and was on track to post its longest winning run in five months, while the FTSEurofirst 300 index rose 0.7 per cent. Europe is one of China’s largest trading partners.
MSCI’s index of emerging market stocks added 0.8 per cent , extending its bounce from five-month lows hit earlier this month. The Australian dollar rose on the prospect of stronger demand from China, Australia’s largest export market.
“Emerging markets look like they’re beginning to find their footing. I believe we’re back to viewing the global economy being in a glass-half-full expansion,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $3.5 billion.
On Wall Street, the Dow Jones industrial average fell 32.05 points, or 0.20 per cent, at 15,962.72. The Standard & Poor’s 500 Index was up 0.34 points, or 0.02 per cent, at 1,820.09. The Nasdaq Composite Index was up 10.61 points, or 0.25 per cent, at 4,201.65.
Procter & Gamble Co lost 2.1 per cent to $77.18 and weighed on both the Dow and S&P 500 after the world’s largest household products maker cut its sales and earnings outlook for the year to reflect unfavourable foreign exchange rates in Venezuela and the devaluation of currencies in various developing markets.
The lackluster move in US stocks follows a rally in the previous session as Congress agreed to advance legislation extending US borrowing authority and the Federal Reserve’s new chief, Janet Yellen, held off from making any changes to the central bank’s schedule for trimming stimulus.
The debt ceiling resolution helped pressure US bond prices yesterday, though. The benchmark 10-year US Treasury note fell 14/32 in price to yield 2.7663 per cent.
“Overall, there’s less uncertainty. I know that the debt ceiling resolution had a negative effect on the bills, but it had a positive effect on the longer end.
“So it all came together to see the sell-off that we’re seeing,” said David Coard, head of fixed income sales and trading at Williams Capital Group in New York.
The Bank of England indicated interest rates may need to rise in just over a year and boosted its growth forecast, sending the pound up against the dollar and the euro.
“The BoE seems to become the first major central bank, bar the Reserve Bank of New Zealand, to hike interest rates,” said Chris Turner, chief currency strategist at ING. “We are expecting a rate hike in February 2015, so in the short term sterling looks good, especially against the euro.”
Sterling jumped to a two-week high of $1.6562, up 0.7 per cent on the day.
In commodities markets, gold prices inched lower after the Fed chief painted an optimistic economic outlook that whetted investors’ risk appetite. Spot gold was down 0.1 per cent at $1,290.14 an ounce, snapping a three-day winning streak.