Global equities rose yesterday as robust US retail sales data signaled economic growth, while the euro fell after the European Central Bank gave its strongest signal yet that it would ease policy to cool the single currency.
The encouraging retail sales from the world’s biggest economy, which had been bogged down by a harsh winter, overrode fears of a military conflict in Ukraine that had punished stock prices earlier.
Ukraine’s President threatened military action after pro-Russian separatists occupying government buildings in the east ignored an ultimatum to leave and another group of rebels attacked a police headquarters in the region. The flare-up came less than a month after Russia completed its annexation of Ukraine’s southern Crimea peninsula.
But the data showing that US retail sales jumped 1.1 per cent in March, the biggest monthly rise in 1-1/2 years, drew investors back into riskier investments. The bounce back in equities followed a sharp sell-off last week.
“This is the first report that activity is bouncing back from the winter weather,” said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee. “This should set the foundation for stocks to go up a bit and bond yields to go higher.”
On Wall Street, the Dow Jones industrial average rose 76.49 points, or 0.48 per cent, to 16,103.24, the S&P 500 gained 9.54 points, or 0.53 per cent, to 1,825.23, and the Nasdaq Composite added 16.438 points, or 0.41 per cent, to 4,016.172.
Financial stocks were among the largest gainers after Citi said its quarterly net profit rose as a smaller loss on its troubled assets offset lower revenue and profit from its core trading and lending businesses. Citi shares jumped 4.2 per cent to $47.62.
The MSCI world equity index, which tracks shares in 45 nations, rose 0.3 per cent at 405.45 points, erasing an earlier loss of 0.3 per cent.
The pan European FTSEurofirst 300 was 0.4 per cent higher at 1,318.58, also erasing earlier losses.
The index shed 2.9 per cent last week. Earlier, Japan’s Nikkei stock average ended down 0.4 per cent at a six-month closing low. It plunged 7.3 per cent last week, the biggest weekly fall since the devastating earthquake and tsunami in March 2011.
But Russian shares tumbled 1.3 per cent and the rouble fell 0.8 per cent to its weakest level against the dollar in nearly three weeks as the tensions in Ukraine weighed.
European Union foreign ministers were to hold talks later yesterday about tougher sanctions against Russia.
The worry for many is that the two sides end up imposing increasingly tough measures that will inevitably harm both.
“The escalation sharply increases risks of an all-out civil war in Ukraine,” Bank of America Merrill Lynch analysts said in a research note.