Stocks across the globe rose to their highest levels of 2016 yesterday and the dollar rose for a third day as investors embraced risk ahead of top policymaker and oil producer meetings.
Singapore’s normally conservative central bank unexpectedly eased policy, at a time when several hundred economists polled by Reuters said economic growth and inflation across the globe would lose further momentum this year, despite years of ultra-easy monetary policy. Many of them said it is now time for governments to increase spending.
Singapore’s move came as the World Bank and International Monetary Fund prepare to meet this week in Washington.
Wall Street stock indexes ticked up a day after the S&P 500 closed at its highest since early December. European shares added to Wednesday’s substantial gains and MSCI’s gauge of stocks across the globe hit its highest level of the year.
The Dow Jones industrial average rose 33.45 points, or 0.19 per cent, to 17,941.73, the S&P 500 gained 2.76 points, or 0.13 per cent, to 2,085.18 and the Nasdaq Composite added 3.20 points, or 0.06 per cent, to 4,950.62.
Financials led Wall Street yet again with shares of Bank of America and Wells Fargo up even as they posted lower quarterly profits and increased reserves to cover bad loans from their energy portfolios.
Oil prices were choppy after a mixed report from the International Energy Agency (IEA), which said it was sceptical that an upcoming meeting of major producers would do much to tighten the supply/demand balance.
Brent crude futures added 0.3 per cent to $44.34 per barrel and US crude rose 0.5 per cent to $41.97.
“I think the market is really looking ahead to Doha,” said Michael Tran, director of energy strategy at RBC Capital Markets in New York.
“An agreement to freeze production does little to change physical balances but constructive rhetoric could serve as a sentiment changer at a minimum, helping to legitimise the current rally and have the market hold the $40 a barrel level as the new psychological floor.”
The US dollar, in which most commodities are priced, added to its recent comeback having just chalked up its biggest one-day gain in seven weeks.
The US currency was at $1.1256 per euro, way above a six-month low of $1.1464 touched on Tuesday, and down 0.2 per cent on the yen at 109.12 yen. The dollar index rose 0.2 per cent.
The Bank of England kept interest rates on hold, as expected, but sterling continued to suffer over worries over how a June vote on Britain’s EU membership will play out.
Against the Singapore dollar the greenback strengthened nearly one per cent, the most in a day in more than eight months.
“The dollar has been doing well over recent days, particularly against Asian currencies today after the [Singapore central bank] eased policy,” said Société Générale FX strategist Alvin Tan.
“We have the IMF meetings coming and we also have the [Opec] Doha meeting which actually for the markets could be more important considering how bulled up the oil market has been recently.”
The US 10-year note was down 11/32 in price, its yield up to 1.799 per cent from 1.762 per cent late on Wednesday, ahead of a sale of 30-year government bonds.