The US benchmark S&P 500 stock index set a record intraday high yesterday as last week’s strong monthly US jobs report worked its way into financial markets, and European shares rose as a single candidate emerged to succeed David Cameron as British prime minister.
The S&P 500 touched a record intraday high of 2,143.16 points as investors harboured greater optimism about the US economy after last Friday’s jobs report, which showed the economy added the most jobs in eight months in June.
The gains in US shares yesterday were broad based. Industrials and consumer staples also hit record highs. The tech-heavy Nasdaq Composite rose above 5,000 for the first time since December.
The STOXX Europe 600 closed up 1.6 per cent at 332.72, its highest close since Britain’s vote to exit the European Union on June 23. Theresa May won the race to succeed Cameron as Prime Minister, reducing political uncertainty in the UK and boosting European shares overall.
The S&P’s record high “reflects investors feeling more comfortable with the ongoing risks globally and realising that, as the US economy continues to grow, earnings look set to at least be reasonable,” said Kate Warne, investment strategist at Edward Jones in St Louis.
The anticipation of stimulus measures also boosted stocks, while Japan’s preparation for a new round of stimulus pushed Treasury yields higher.
US Treasury yields rose on Japanese Prime Minister Shinzo Abe’s order for a fresh round of fiscal stimulus, which contributed to the boost in risky assets such as stocks and reduced demand for safe-haven US bonds, and as investors braced for $56 billion in new coupon-bearing supply this week.
US 30-year yields were last at 2.142 per cent after hitting a record low of 2.089 in overnight trading. Benchmark 10-year yields were last at 1.425 per cent, from a yield of 1.365 per cent late Friday.
MSCI’s all-country world equity index was last up 4.16 points, or 1.04 per cent, at 405.15.
The Dow Jones industrial average was last up 125.3 points, or 0.69 per cent, at 18,272.04. The S&P 500 was up 11.85 points, or 0.56 per cent, at 2,141.75. The Nasdaq Composite was up 42.31 points, or 0.85 per cent, at 4,999.07.
Europe’s broad FTSEurofirst 300 index ended 1.5 per cent higher at 1,315.49.
Benchmark Brent crude and US crude prices hit two-month lows of $45.90 a barrel and $44.53 a barrel, respectively, pressured by rising Canadian supplies, a higher US oil rig count and cuts in bullish hedge fund bets on crude.
The dollar rose to a 10-day high against the safe-haven yen of 102.84 yen on Monday, climbing more than two per cent, following Abe’s call for new stimulus.
“It looked like part of what held the BOJ back several times earlier this year is it just didn’t make sense to expand (quantitative easing) if there’s no coordination with fiscal policy,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.
“But now there is.”