European and US stocks advanced yesterday, on track to close the week on a firmer note, while the dollar recovered as investors were encouraged
by upbeat bank earnings and positive US economic data.
Investors largely shrugged off the biggest fall in Chinese exports since 2009 to focus on US data that suggested stronger growth. Market participants largely resumed buying across equity markets based on higher growth expectations that had tailed off this week, with auto and bank shares leading the way.
Bank of America Merrill Lynch kicked off the US bank earning season, reporting a 47 per cent rise in fourth-quarter profit thanks to an upswing in market activity following the election of Donald Trump as US president on November 8.
JP Morgan Chase also reported strong earnings, with a 24 per cent rise in fourth-quarter profits.
US economic data have also been a source of optimism as retail sales rose in December given strong demand for automobiles and furniture. Producer prices expanded as well.
In late morning trading, the Dow Jones Industrial Average edged up 0.1 per cent to 19,907.7, while the S&P 500 gained 0.3 per cent to 2,276.72. The Nasdaq Composite , on the other hand, added 0.57 per cent to 5,579.15.
The dollar, meanwhile, rebounded from losses against a basket of major currencies the previous day to trade slightly higher at 101.390, while it rose 0.3 per cent against the yen to 115.07 yen.
The dollar index though was still headed for its worst weekly performance in more than
two months.
In the bond market, US Treasury yields rose across the board bolstered by yesterday’s better-than-expected data such as the big rise in US inflation expectations as shown in the University of Michigan consumer sentiment report.
Benchmark US 10-year yields fell 13/32 in price, yielding 2.411 per cent, up from Thursday’s 2.361 per cent.
German 10-year bond yields were also higher, up at 0.268 per cent, from 0.234 per cent late on Thursday.
Europe’s broad FTSEurofirst 300 index added 0.93 per cent to 1,446.08.
Germany’s DAX was up 0.94 per cent and Britain’s FTSE 100 rose 0.6 per cent, on course for its 12th record high close and 14th consecutive daily gain.
In commodity markets, Brent crude was down 0.91 per cent, at $55.5 a barrel, while US crude fell 1.15 per cent, at $52.4 per barrel. Spot gold fell 0.19 per cent, to $1,193.28 an ounce, having risen overnight to a seven-week high above $1,200.