Dow Jones and the US S&P 500 industrial average stock indexes set record intraday highs yesterday after reduced global political tensions and upbeat corporate results from Alcoa boosted risk appetite, while European shares also rallied.
The benchmark S&P 500 hit 2,151.96, topping Monday’s intraday record high by about eight points, while the Dow rose to 18,353.76 to top its previous record intraday high touched in May 2015. The tech-heavy Nasdaq Composite also gained, wiping out its losses for the year.
Increasing prospects of global economic health boosted shares, while Alcoa reported a smaller-than-expected drop in quarterly profit, sending the aluminium producer’s shares up more than four per cent and helping boost optimism about the earnings season.
Investors’ appetite for equities has increased after robust economic data, including a stronger-than-expected US jobs report for June last Friday, and low yields on government bonds. Easing political tensions in Britain and Japan have reduced some global uncertainties.
The STOXX Europe 600 was up for a fourth straight session after posting its highest close on Monday since Britain voted to leave the European Union on June 23. Gains in shares of Italian banks helped fuel the rise, with UniCredit last up more than 13 percent.
“What is driving the market today is political stability in both Japan and the UK and a global drive for yield, which central banks are going to support,” said John Brady, a senior vice president at R.J. O’Brien & Associates in Chicago.
MSCI’s all-country world equity index was last up 0.83 per cent at 408.24.
The Dow Jones industrial average was last up 87.46 points, or 0.48 per cent, at 18,314.39. The S&P 500 was up 11.55 points, or 0.54 per cent, at 2,148.71. The Nasdaq Composite was up 30.74 points, or 0.62 per cent, at 5,019.38.
Europe’s broad FTSEurofirst 300 index was last up 0.97 percent, at 1,328.27. Safe-haven assets such as U.S. Treasuries, the Japanese yen and gold fell in price.
Benchmark 10-year Treasury yields, which move inversely to prices, hit a one-and-a-half-week high of 1.503 per cent earlier.
Yields rose as expectations of new stimulus in Japan boosted stocks and reduced demand for safe haven bonds, and ahead of the Treasury Department’s auction of $20 billion in 10-year notes.
“Some of the uncertainty, ‘flight-to-quality’ type of unknown bid is leaving the markets,” said Tom Tucci, head of Treasuries trading at CIBC in New York.
The US dollar hit its highest level in more than two weeks against the yen of 104.65 yen on the global risk appetite and anticipation of more Japanese stimulus.
The euro was last 0.3 per cent higher against the dollar, however, at $1.1087. Gold fell for a second straight day.