The US dollar rose against the yen and euro yesterday and US stocks were set to close at a new record as the outlook for the US economy continued to brighten following last week’s strong jobs report.
The euro fell against the greenback after European Central Bank President Mario Draghi said the bank, which cut interest rates last week, is watching economic data and is ready to act again.
Purchasing managers indexes yesterday showed recession dragged on eurozone companies and business growth flagged in China, adding to a report on Friday that US corporate growth slowed in April.
Many analysts have expected a pullback in US equities for weeks now, as the S&P 500 index continues to post historic highs. Wall Street has largely avoided a correction as traders have used weakness as an opportunity to add to long positions.
Yesterday’s gains follow a strong run in stocks since the start of the year. Accommodating monetary policies that have kept interest rates low, as well as solid earnings, have helped lift the S&P 500 13.5 per cent so far this year.
In afternoon trading, the Dow Jones industrial average rose 0.62 points or zero per cent, to 14,974.58, the S&P 500 gained 3.75 points or 0.23 per cent, to 1,618.17 and the Nasdaq Composite added 14.91 points or 0.44 per cent, to 3,393.54.
The eurozone’s blue chip Euro STOXX 50 index closed down 0.5 per cent after hitting a near two-year peak on Friday.
A 0.56 per cent rise in MSCI’s broadest index of Asia-Pacific shares outside Japan left the MSCI world equity index little changed.
Brent crude futures settled up 1.2 per cent at $105.46 as supply concerns followed Israeli air strikes on Syria on Friday and Sunday. Trading was choppy, however, as demand worries cemented on the weak data from China and the eurozone sparked demand concerns.
US crude futures settled up 0.6 per cent at $96.16.
The US dollar rose for a third straight session against the yen and looked set to make another run at the 100-yen level after last week’s surprisingly strong US jobs data rekindled optimism about the US economy.
The yen lost 0.3 per cent to 99.36 per US. dollar, having hit 99.45, its weakest since April 25, according to Reuters data.
The euro also weakened against the greenback after Draghi’s comments on possible further easing from the ECB, but stayed within last week’s range. The eurozone single currency was recently down 0.3 per cent at $1.3077.
Gold prices were little changed after two weeks of gains, on expectations last month’s price slide to the lowest in more than two years has run its course for now.
Spot gold was recently down 0.1 per cent at $1,468.59 per ounce.
US Treasuries prices slipped as investors continued to digest Friday’s better-than-expected jobs report, which sent yields surging to their highest in three weeks.