Global equity markets rose yesterday, lifted by the biggest gain in US factory orders in eight months and solid manufacturing data in Germany, while German bund yields rose as investors shook off deflation fears that had gnawed European bonds.
Trading volume was lighter than usual in most European markets because of a public holiday in Britain, home to the region’s largest stock market and many large trading firms.
Germany’s Dax index rose 1.6 per cent to outperform its peers after eurozone factories raised prices for the first time in eight months, according to a survey that also showed headcount rose at the fastest pace in nearly four years.
When viewed with a report from the European Central Bank last week that showed credit creation in Spain and Italy had picked up in March, the manufacturing data bodes well for inflation expectations in Europe, said Anastasia Amoroso, global markets strategist at J.P. Morgan Asset Management.
“If there’s credit creation then chances are there is jobs creation and therefore earnings creation,” Amoroso said. “It is very good for stocks, absolutely.”
MSCI’s all-world country index of equity performance in 46 countries rose 0.26 per cent, while the eurozone’s blue-chip Euro STOXX 50 index was up 0.64 per cent at 3638.87 points.
The Dow Jones industrial average rose 75.9 points, or 0.42 per cent, to 18,099.96. The S&P 500 added 9.17 points, or 0.43 per cent, to 2,117.46 and the Nasdaq Composite gained 23.78 points, or 0.47 per cent, to 5,029.17.
The yield on 10-year German bunds rose above 0.40 per cent to levels last seen before the ECB began buying bonds earlier this year. It last traded at 0.444 per cent.
The dollar edged higher after a two-week correction in thin trading on data suggesting the US economy might be stabilising following a soft patch in the first quarter. The greenback rose 0.1 per cent against a basket of six major currencies.
The euro was down 0.36 per cent against the dollar at $1.1158, while it was flat to slightly higher against the yen, up 0.03 per cent at 120.20.
Oil eased after reaching a 2015 high, as ample current supplies and weak Chinese factory activity countered expectations of a tighter supply and demand balance later this year.
Brent crude slipped 26 cents to $66.20 a barrel. US crude lost 33 cents to $58.82 a barrel.
A business survey showed activity at China’s factories shrank in April at its fastest pace for a year as new orders fell, hardening the case for policy stimulus to boost the world’s second biggest economy.