World equity indexes gained modestly yesterday after a rout last week, with rosy US housing data helping Wall Street shrug off a weak manufacturing report, while the prospect of higher US interest rates lifted the dollar for a third day.
US equities rebounded from a lower open as a report showed that US homebuilder sentiment rose in August to its highest level in nearly a decade.
Earlier, stocks had dropped as Empire State data showed August manufacturing activity in New York was at its weakest in years.
“Empire State [data] was horrendous compared to what the expectations were, but Empire State is also a very regional number and a very volatile number,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.
“They are all looking to Wednesday’s FOMC meeting minutes and what it is going to mean, what are they going to say.”
Minutes from the US Federal Reserve’s most recent policymaking meeting are due to be released on Wednesday. Investors await that document for clues on how soon the Fed may hike rates for the first time in nearly ten years, with many analysts expecting such a move by the end of the year.
The expectations for an impending rate hike helped the dollar rise, as did reassurance from China fixing its yuan exchange rate slightly higher for a second day running.
Housing stocks advanced after the NAHB/Wells Fargo Housing Market index showed US homebuilder sentiment rose in August to its highest since a matching reading almost a decade ago. The PHLX housing sector index gained 0.8 per cent.
European stocks bounced from last week’s heavy selloff of nearly three per cent, with the pan-European FTSEurofirst 300 index up 0.4 per cent.
MSCI’s all-country world stock index edged down 0.01 per cent.
Crude oil remained weak, with US crude down 0.5 per cent at $42.49, while Brent down 0.1 per cent to $49.13 after data indicated Japan’s economy contracted in the second quarter amid oversupply concerns.
The Dow Jones industrial average rose 29.6 points, or 0.17 per cent, to 17,507, the S&P 500 gained 4.23 points, or 0.2 per cent, to 2,095.77 and the Nasdaq Composite added 16.57 points, or 0.33 per cent, to 5,064.80.
Germany’s DAX slipped 0.2 per cent and France’s CAC 40 climbed 0.8 per cent. The FTSE 100, was 0.2 per cent higher.
The yuan fell more than four per cent at one point last week, pulling down riskier assets including emerging currencies globally on fears of a currency war. But China slowed the pace of the currency’s drop, and yesterday fixed it higher for the second day in a row.
Benchmark 10-year notes were last up 10/32 in price to yield 2.163 per cent from 2.198 late on Friday.