US stocks led equity markets around the globe to their highest in a month yesterday after US factory and housing data came in better than expected and oil prices rose.
Construction spending in the US rose to the highest level since October 2007 and a measure of the US manufacturing sector outpaced analysts’ expectations across the board.
That helped push US and European stock markets up more than one per cent in morning US trading.
“The [manufacturing] data came out considerably stronger than anticipated, just showing that, hey, there’s underlying strength in the economy,” said Kent Engelke, chief economic strategist at Capitol Securities Management in Richmond, Virginia.
“The long and short of it is the American economy is showing some unexpected strength.”
The Dow Jones industrial average rose 233.83 points, or 1.42 per cent, to 16,750.33, the S&P 500 gained 30.99 points, or 1.6 per cent, to 1,963.22 and the Nasdaq Composite added 88.36 points, or 1.94 per cent, to 4,646.31.
Global equity markets were further bolstered by the prospect of the European Central Bank adding stimulus in the eurozone after soft factory data.
European shares extended their strongest run of the year, with the FTSEurofirst 300 up 0.55 per cent. London’s FTSE 100 was up 0.7 per cent.
A global gauge of equity markets rose more than 1 per cent, touching its highest in a month.
Stocks looked to continue a yearlong correlation with oil as crude prices reversed an early negative turn and again moved toward a two-month high.
Benchmark Brent crude futures rose 0.8 per cent to $36.83 a barrel. US crude futures were trading at $34.24 a barrel, up 1.5 per cent.
The stronger US data pushed the dollar higher against the yen with the greenback rebounding after its worst month against the Japanese currency since 2008.
The yen also suffered from Japan becoming the first G7 economy to sell a 10-year government bond at a negative yield, meaning that investors are effectively paying rather than getting paid to hold the country’s bonds.
The dollar rose 0.85 per cent against the yen to 113.62 yen.
The euro fell to a one-month low against the dollar and touched its lowest in almost three years against the yen .
The dollar index, which measures the greenback against a basket of major currencies, rose to a one-month high of 98.57.
The benchmark 10-year Treasury note was last down 20/32 in price to yield 1.8075 per cent, up from 1.74 per cent late on Monday.