Global equity markets were modestly higher yesterday, though disappointing data limited gains in US stocks, as a rebound in oil prices supported markets as investors remain attuned to signals the commodity is sending about global demand.
US economic data showed consumer spending fell and construction spending rose less than expected in December, while an industry report pointed to slowing in the manufacturing sector in January.
Crude oil prices rose as investors shrugged off a US refinery strike and focussed on a falling US rig count that signalled lower production in the future.
US crude gained two per cent to $49.36 while Brent gained 2.7 per cent to $54.45.
The S&P 500 is still down nearly five per cent from its record high set on December 29, pulled lower by a lacklustre earnings season and data showing an economy growing at a slower pace than investors had been anticipating.
“Fundamentals still look strong, but earnings are really coming in under expectations, which is creating a general concern that is leading to heavy volatility,” said James Liu, global market strategist for JPMorgan Funds in Chicago. “We got used to good earnings growth and data and now we’re facing the first real test of that sentiment not always being true.”
Stocks in Europe were mixed, with notable drops in Spanish and Italian shares as Greece seeks to end its existing debt deal and data pointed to weak January growth in euro zone factory activity. Spain and Italy have seen a rise in popularity of anti-austerity parties.
On Saturday, tens of thousands marched in Madrid in the biggest show of support yet for Spanish anti-austerity party Podemos, whose policies have drawn comparisons with the Syriza party that now governs Greece.
Greece’s leftist government began its drive to persuade a skeptical Europe to accept a new debt agreement. Finance Minister Yanis Varoufakis met his British counterpart George Osborne yesterday.
MSCI’s all-country world stock index, a measure of stock performance in 45 countries, rose 0.4 per cent. The FTSEurofirst 300 index of top European shares was up 0.2 per cent.
The Dow Jones industrial average was up 36.25 points, or 0.21 per cent, at 17,201.20. The Standard & Poor’s 500 Index was up 7.93 points, or 0.40 per cent, at 2,002.92. The Nasdaq Composite Index was up 4.88 points, or 0.11 per cent, at 4,640.12.
The dollar weakened in the wake of the data, with the US dollar index last off 0.3 per cent. The benchmark 10-year US Treasury note was up 1/32, the yield at 1.676 per cent.