Shares climbed across the euro zone yesterday after data showed robust growth, and Wall Street ticked higher as a US federal budget proposal called for slashing healthcare programmes and boosting military spending.
Businesses across the euro zone were on their strongest run since 2011, according to IHS Markit’s Flash Composite Purchasing Managers’ Index for May.
It matched the previous month’s 56.8, its highest since April 2011. A reading above 50 indicates growth.
“It’s a very good result and it’s broad-based. We’ve got a good pace of growth here. The fact we have maintained this high level in May is great news for second-quarter GDP,” said Chris Williamson, chief business economist at IHS Markit.
The pan-European FTSEurofirst 300 index rose 0.29 per cent and MSCI’s gauge of stocks across the globe gained 0.14 per cent.
The euro had hit a six-month high but retreated as traders locked in some of this month’s 3.5 per cent surge, while a suicide bombing in Britain subdued the pound after more signs of a drop in the UK economy dented it.
The bombing of a pop concert in Manchester killed 22 people and wounded dozens. Sterling had fallen but rose 0.8 per cent in mid-day trading to $1.3010.
In the United States, investors looked to President Donald Trump’s first full budget plan, released yesterday.
It calls for an increase in military and infrastructure spending but also a raft of politically sensitive cuts, including to healthcare and food assistance programs for the poor, with the aim of chopping government spending by $3.6 trillion and balancing the budget over the next decade.
“In the US all eyes are on Trump’s budget proposal,” said Nadia Lovell, US equity strategist at J.P. Morgan Private Bank in New York.
“People will keep an eye on any sort of indication of corporate tax reform as well as infrastructure spending.”
The Dow Jones Industrial Average rose 37.26 points, or 0.18 per cent, to 20,932.09, the S&P 500 gained 3.21 points, or 0.13 per cent, to 2,397.23 and the Nasdaq Composite dropped 1.83 points, or 0.03 per cent, to 6,131.79.
Mr Trump’s budget in its current form is unlikely to be approved by Congress, which will craft its own tax and spending plans.
However, the plan’s proposal to sell off half of strategic US oil reserves weighed on crude futures, offsetting optimism over expectations that other major oil producers would agree to extend supply curbs this week.
Oil prices bounced around yesterday. US crude rose 0.1 per cent to $51.18 per barrel and Brent was last at $53.94, up 0.13 per cent on the day.
In Greece, government bond yields rose and banking stocks fell after euro zone finance ministers failed to agree debt relief for Greece with the IMF and did not release new loans to Athens.