The dollar surged to a seven-year high against the yen and global equity markets rallied yesterday on news of strong private-sector US job growth and after the Republican Party seized control of the US Senate in midterm elections, auguring well for pro-energy and other business policies.
The Dow advanced to a record high on the sweeping Republican victory that dealt a punishing blow to President Barack Obama, which is expected to limit his legislative agenda in his last two years in office.
The beaten-down energy sector was the second-biggest gainer of the S&P 500's 10 sectors, rising 1.7 per cent, as the Republican majority could lead to approval of oil and natural gas pipelines, and reforms for crude and natural gas export laws.
“In the end the results were pretty decisive,” said John Carey, a portfolio manager at Pioneer Investment Management in Boston. “That's good news for the industries that had been subject to regulatory issues.”
MSCI's all-country world stock index rose 0.3 per cent, while both the Dow and S&P 500 traded above closing highs set last week. Stocks in Europe rose about 1.7 per cent, helped by solid company results such as British retailer Marks & Spencer, whose shares surged 9.7 per cent.
The Dow Jones industrial average rose 98.23 points, or 0.57 per cent, to 17,482.07. The S&P 500 gained 9.42 points, or 0.47 per cent, to 2,021.52 and the Nasdaq Composite added 6.32 points, or 0.14 per cent, to 4,629.96.
The pan-European FTSEurofirst 300 blue-chip index rose 1.69 per cent to close at 1,348.99. The blue-chip Euro STOXX 50 index rose 1.89 per cent to close at 3,091.54.
Some traders said the rally in Europe could be short-lived if European Central Bank chief Mario Draghi failed to un-veil new stimulus measures to spur growth in the struggling euro zone. Most euro zone bond yields edged up as investors asked if the ECB can boost the region's flagging economy.
Yields on 10-year German bunds rose to 0.828 per cent.The dollar rose to 114.84 yen, its highest since November 2007, and last traded at 114.56, up 0.86 per cent.
The dollar index soared to 87.606, its highest in more than four years, before paring gains to trade up 0.47 per cent at 87.394. The euro fell 0.47 per cent to $1.2485.
US Treasury debt yields rose after payroll processor ADP reported solid US private-sector job growth in October but later pared losses to trade flat.
The benchmark 10-year US Treasury note fell 3/32 in price to yield 2.3550 per cent.
Brent oil touched a new four-year low, briefly sinking below $82 a barrel after weak Chinese and European data, but strong US employment figures and a surprise fall in inventories turned Brent and US crude higher.