European shares rose and US stocks hit record highs yesterday, helped by corporate results, while uncertainty about French elections pushed the euro to its biggest loss in about three weeks.
The Dow Jones Industrial Average and the Nasdaq Composite hit record levels, while the S&P 500 was less than three points away from hitting another all-time high.
Fourth-quarter US earnings are estimated to have risen 8.2 per cent – the best in nine quarters.
The Dow Jones Industrial Average rose 57.95 points, or 0.29 per cent, to 20,110.37, the S&P 500 gained 3.24 points, or 0.14 per cent, to 2,295.8 and the Nasdaq Composite added 17.52 points, or 0.31 per cent, to 5,681.07.
The US trade deficit fell more than expected in December as exports rose to their highest level in more than one-and-a-half-years, outpacing an increase in imports. The dollar gained 4.4 per cent against the currencies of the United States’ main trading partners last year.
GM fourth-quarter net income dropped partly from foreign exchange losses and the auto-maker forecast flat 2017 profit per share despite hefty stock buybacks. Shares fell four per cent.
In Europe, shares also rose on encouraging company updates and gains in mining stocks. The benchmark STOXX 600 index was last up 0.5 per cent.
However, the increasingly un-predictable French presidential race continued to unnerve in-vestors, driving them away from French government bonds and tipping the euro towards its biggest fall this year. The euro fell 0.8 per cent to $1.0665, its biggest fall since December 15, before recovering to $1.0688.
“It is clear the euro is vulnerable to political uncertainty,” Rabobank analysts said yesterday.
“Although opinion polls suggest that [Far-right National Front Leader Marine] Le Pen will not win the second round of the French presidential election in May, polls have wrongly picked the winners of both socialist and republican primaries,” they added.
Ms Le Pen has vowed to take France out of the eurozone.
The premium investors demand for buying French 10-year government bonds over German 10-year bonds rose to 78 basis points, the highest level since November 2012 before easing back a bit. It was 50 basis points only two weeks ago.
Doubts over a rescue package for Greece also stoked concerns over the future stability of the euro zone.
The spread between Italian and German bonds widened to 202 basis points, the highest in three years, while the Portuguese-German spread hit 390 basis points for the first time in three years.
The spreads narrowed a bit by the European mid-day.
Oil prices buckled as lower production by Opec and other exporters was undermined by growing evidence of a revival in US shale production and sluggish demand.
US crude fell 1.83 per cent to $52.04 a barrel. Brent fell 1.47 per cent to $54.90.