Stock prices across the world climbed to record highs yesterday on news euro zone business activity accelerated to its swiftest pace in six years, while the dollar gained on the view the Federal Reserve might raise interest rates in March.
The revived possibility of a United States rate hike next month, together with demand for risky assets, propelled bond yields higher but weakened the gold prices.
Oil futures yesterday rose more than one per cent after Opec said it was sticking to its deal to reduce output.
The rally in equity markets around the globe, led by Wall Street, has been stoked by hopes of tax cuts, infrastructure spending and looser regulations from United States President Donald Trump and a Republican-controlled Congress.
Details on US fiscal stimuli remained sketchy, but investors seemed patient for progress on these possible programs as they have been assuaged by upbeat company results.
“It does seem like a rally feeding on itself. People are now reluctant to sell into this rally,” said John Canavan, market strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.
MSCI’s world stock index which tracks shares in 45 nations, rose 1.32 points or 0.3 per cent, to 445.78 after touching an all-time peak at 445.82.
On Wall Street, the Dow Jones Industrial Average rose 113.02 points, or 0.55 per cent, to 20,737.07, the S&P 500 gained 13.55 points, or 0.58 per cent, to 2,364.71 and the Nasdaq Composite added 25.06 points, or 0.43 per cent, to 5,863.64.
The three US stock indexes hit record intraday highs, led by stronger-than-forecast results from retailers Wal-Mart, Macy’s and Home Depot.
Europe’s benchmark index of 300 leading shares touched its highest since December 2015, last up 0.7 per cent at 1,473.28 points. Purchasing manager index (PMI) reports showed the euro zone economy expanding much faster and more smoothly than expected.
The FTSEurofirst 300 index reversed an earlier fall, precipitated by Europe’s biggest bank HSBC’s surprise 62 per cent drop in annual profits.
Stronger appetite for equities and chances of another US rate increase in the coming months pushed up the dollar index by 0.5 per cent at 101.46.
Philadelphia Fed President Patrick Harker told Market News International this week he would likely support a quarter point rate increase at the central bank’s March 14-15 meeting.
US 10-year Treasury yield was up 1 basis point at 2.433 per cent, while German 10-year Bund yield was up nearly 2 basis points at 0.317 per cent.
In the oil market sector, Brent crude was last up $0.52, or up 0.93 per cent, at $56.7 a barrel. United States crude was last up $0.73, or up 1.37 per cent, at $54.13 per barrel.
Spot gold prices fell $3.94 or 0.32 per cent, to $1,234.06 an ounce.