Stocks on Wall Street were mixed yesterday after robust US consumer confidence data, while Russian assets rose after major industrialised nations warned of additional sanctions without committing to a particular action.
US consumer confidence rose more than expected in March, climbing to its highest level since January 2008. The report was the latest in a string of positive reads on the economy that supported views that softness early this year was related to bad weather and not weakening fundamentals.
“Investors became momentarily concerned about valuation, but that pullback was healthy, and we could see modest gains from here just because equities remain the most attractive place to be,” said Kristina Hooper, head of portfolio strategies at Allianz Global Investors in New York, which has $475 billion in assets under management.
Biotech shares fell after a rebound at the open, extending their bearish streak for a fifth straight day. Some internet stocks were up after Monday’s mauling.
Investor spirits brightened after a meeting of Western leaders ended with little more than fist-shaking at Russia and news emerged that Moscow’s and Kiev’s foreign ministers had held an impromptu first meeting.
Sanctions have been imposed against Moscow for its seizure of Crimea, but investors say asset freezes have had little effect.
Shares in Moscow rose, with the Micex Index gaining two per cent, while the rouble gained one per cent against the dollar.
The Dow Jones industrial average was up 27.62 points, or 0.17 per cent, at 16,304.31. The Standard & Poor’s 500 Index was down 0.31 points, or 0.02 per cent, at 1,857.13. The Nasdaq Composite Index was down 20.16 points, or 0.48 per cent, at 4,206.23
The rebound was an indication that while concerns persist about geopolitical tensions in Ukraine and slowing growth in China, investors were not bearish on equities wholesale.
A measure of world equity markets edged up 0.29 per cent.
Long-dated US debt prices fell and short-dated Treasury prices rose, interrupting a four-day trend in which shorter-dated debt weakened more quickly than longer-term bonds.
Two-year and five-year notes have been the worst performers since Fed chief Janet Yellen’s remarks that the central bank could raise rates six months after its current bond-buying programme ends, suggesting a potential hike by spring of 2015.
That has flattened the yield curve, narrowing the difference between short- and long-dated securities, which suggests more concern about higher rates and a bit less confidence in long-term growth.
Philadelphia Fed President Charles Plosser, a notably hawkish member of the Fed who has argued for an end to the Fed’s monthly bond-buying programme, told CNBC yesterday that Yellen had not made a mistake on her timing for a rate hike.
“We’ve moved a lot since Yellen’s press conference last Wednesday. The flattener is a crowded trade, you are seeing people taking off some positions for event risk,” said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.