Global stocks rallied yesterday, boosted by a rise in oil and commodity prices, while the euro and the British pound fell sharply against the dollar on fears Britain would leave the EU.
Sterling fell to a near seven-year low during the session after popular London mayor Boris Johnson said he would campaign to leave the EU ahead of a June 23 referendum.
Battered oil prices jumped after the world’s oil consumer body said it expected US shale production to fall this year and next. Benchmark Brent rose 4.6 per cent to $34.53 a barrel, while US crude gained 6.5 per cent to $31.56 a barrel.
Stocks, whose performance has been tightly linked to oil prices as the commodity’s slide has deepened, posted solid gains across major markets.
“Driving everything has been the recovery in energy and commodity prices this morning,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
“That has been the part of the market that investors have been most concerned with so seeing a rally, particularly in oil, has been taken positively.”
The Dow Jones industrial average was rising 183.64 points, or 1.12 per cent, at 16,575.63, the S&P 500 was gaining 22.64 points, or 1.18 per cent, at 1,940.42 and the Nasdaq Composite was adding 49.00 points, or 1.09 per cent, at 4,553.43.
All 10 major S&P sectors were higher, led by roughly two per cent gains for both energy and materials sectors.
The gains built on last week’s strong performance after a poor overall start for US equities in 2016.
The pan-European FTSEurofirst 300 share index rose 1.5 per cent. Mining stocks were among the best performers, with Anglo American rising 10.9 per cent, as the price of copper reached a two-week high.
Stocks shrugged off a survey showing private sector business activity in the eurozone increased at its weakest pace in more than a year in February.
MSCI’s index of world shares rose 1.1 per cent.
Worries about a possible British exit from the EU sent the euro down one per cent against the dollar. Sterling fell two per cent against the greenback and dropped as low as $1.4057.
“A Brexit would be bad for sterling, but it would also be bad for the euro,” said Neil Jones, Mizuho’s head of hedge fund sales in London.
The dollar was up 0.9 per cent against a basket of six currencies.
US Treasury yields rose as rising stock and oil prices reduced demand for safe haven debt, ahead of an expected government sale of $88 billion in new short- and intermediate-dated debt this week.
Benchmark 10-year Treasuries were last down 2/32 in price to yield 1.7552 per cent.
Zinc prices surged to a four-month peak and other base metals also gained as investors’ appetite for risk increased while they also worried about poten-tial shortages.
Gold fell 1.3 per cent as the dollar strengthened and investor appetite for risk increased.