A global gauge of stock markets rose yesterday as investors were cautiously optimistic about a possible de-escalation of the conflict in the Russia-Ukraine border, while Brazilian markets were shaken by the death of presidential candidate Eduardo Campos in a plane crash.
Copper, a barometer for global economic growth, fell more than one per cent to a seven-week low.
Investor anxiety over the standoff between Russia and Ukraine ebbed slightly after Polish Foreign Minister Radoslaw Sikorski said late on Tuesday that the possibility of Russia’s military invading eastern Ukraine had receded after Moscow agreed to send in humanitarian aid under Red Cross auspices.
Still, Ukraine denounced the convoy as an act of Russian cynicism and said it would not be allowed to cross the border.
“The market seems comfortable with what’s going on abroad, and while there’s always a risk of escalation, which would give the market pause, trying to anticipate that is pure speculation,” said David Lebovitz, global market strategist at J.P. Morgan Funds in New York.
“Focusing on fundamentals has us viewing any weakness as a buying opportunity,” he added.
On Wall Street, the Dow Jones industrial average was up 84.52 points, or 0.51 per cent, at 16,645.06. The Standard & Poor’s 500 Index was up 12.01 points, or 0.62 per cent, at 1,945.76. The Nasdaq Composite Index was up 38.64 points, or 0.88 per cent, at 4,427.90.
European shares rose, helped in part by forecast-beating results from bellwethers such as Swiss Life and E.ON . The FTSEurofirst 300 index of top European shares rose 0.4 per cent, with MSCI’s world stock index up 0.5 per cent.
Brazil’s Bovespa index fell as much as 2.1 per cent after news that presidential candidate Eduardo Campos was killed in a plane crash in the southeastern city of Santos.
Campos, a former ally of President Dilma Rousseff, positioned himself as a business-friendly leftist and was third in polls with about 10 per cent of voter support.
The Brazilian currency also weakened to as much as 2.2880 per dollar, before trading little changed on the day at 2.2748.
In other currency markets, sterling fell 0.7 per cent against the US dollar to a four-month low of $1.6685 after the Bank of England slashed its forecast for wage growth, prompting investors to push back expectations of when interest rates would rise.
But the euro rose against the greenback to as much as $1.3415 following data showing US retail sales unexpectedly stalled in July, pointing to some loss of momentum. “The (retail sales) report draws a picture of weaker consumer spending in the third quarter. That plays into expectations the Fed will be in no hurry to raise interest rates,” said Sireen Haraji, currency strategist at Mizuho Corporate Bank in New York. The euro was little changed at $1.3372.
US Treasury debt yields fell after the soft retail sales data, as traders bet on more support from the US central bank.
“The knee-jerk reaction to the retail sales data was a disappointment” said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee. The benchmark 10-year Treasury note was up 7/32 in price, its yield down to 2.4166 per cent.
German 10-year yields fell three basis points to 1.03 per cent, having hit a record low of 1.02 per cent last week.
Copper, seen as a barometer of global growth, fell to a seven-week low below $6,874 per tonne, dragged down by soft data on China’s property sector, which raised concerns about the outlook for the metal used in power and construction. It was last down 1.1 per cent at $6,886.
September Brent crude futures, which expired yesterday, fell as low as $102.37, the weakest for a front-month price since July 1, 2013, before bouncing 0.7 per cent higher on the day at $103.75.
The outlook, however, continues to be bearish.