Major stock markets rose yesterday, with the US S&P 500 index nearing its all-time intraday high, while the dollar rallied from a one-month low against the yen on bets the Bank of Japan will announce further monetary easing steps this week.
Gold fell to a two-and-a-half-week low, pressured by a strengthening dollar and as investors moved away from safe havens and bought stocks. Other commodities retreated, with copper falling to a seven-month low on worries about global economic growth.
Investors looked towards policy meetings this week by the Bank of Japan and the European Central Bank, along with the US government’s release on Friday of its payrolls report for March.
On Wall Street, stocks rebounded from the previous session’s decline. Healthcare shares surged on brighter earnings prospects as the US government dropped plans to decrease payments for private Medicare Advantage insurers, opting instead to raise them by 3.3 per cent.
“Given how lean these companies are, this news is pretty significant and could mean a 10 to 15 per cent increase in earnings,” said Phil Orlando, chief equity market strategist at Federated Investors in New York.
The Dow Jones industrial average gained 93.40 points, or 0.64 per cent, to 14,666.25. The benchmark Standard & Poor’s 500 Index rose 10.03 points, or 0.64 per cent, to 1,572.20. The Nasdaq Composite Index added 25.11 points, or 0.78 per cent, to 3,264.28.
The S&P 500 set an all-time closing high last week, but has stayed shy of its intraday record of 1,576.09.
European shares rallied after a two-week slide as M&A activity helped lift sentiment, boosted by Vodafone on rumours of a multi-billion-pound break-up bid for the UK telecoms group. Europe’s FTSEurofirst 300 index gained 1.3 per cent to 1203.79 points.
The broad MSCI world equity index rose 0.5 per cent to 360.29 points.
The dollar rose 0.3 per cent to 93.52 yen. The BoJ meets on April 3-4 and is widely expected to ramp up its bond buying and to extend the maturities of the bonds it purchases under new Governor Haruhiko Kuroda.
The euro fell 0.1 per cent to $1.2834 after Markit’s Eurozone Manufacturing PMI fell in March to 46.8 from 47.9 in February, extending to a 20th month its run below the 50 mark that separates growth and contraction.
The data boosted expectations European Central Bank President Mario Draghi would strike a more dovish tone at Thursday’s monetary policy outlook meeting and could provide hints about a possible rate cut.
“We expect eurozone fundamentals to deteriorate further. This, combined with outflow pressures, should keep the euro’s downward trend intact,” said Camilla Sutton, chief currency strategist, at Scotiabank in Toronto.
Spot gold hit an intraday high of $1,603.60 an ounce, then fell to $1,577.21 an ounce, down from $1,598.40 on Monday. “You have a rally in equities and strength in the dollar and that seems to be the focus right now, which is putting gold in the back seat,” HSBC analyst Howard Wen said. Benchmark copper on the London Metal Exchange (LME) hit a session low of $7,439 a tonne, its weakest since August 21, and closed at $7,465 a tonne.