World stocks hit a one-month high yesterday as strong company earnings and a bullish outlook from the head of the US central bank buoyed the dollar.
The dollar’s advance took its toll on a host of global currencies and melted gold to its lowest level in a year, but otherwise traders’ spirits were definitely up.
Morgan Stanley became the latest heavyweight US bank to deliver a jump in profits though Wall Street looked set for a groggy start after reclaiming the 2,600-point mark on Tuesday.
In Europe, London’s FTSE rose 0.5 per cent as Brexit continued to hit the pound. Germany’s DAX climbed to its a one-month high on hopes the European Union and United States would cut a deal on car tariffs.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose as much as 0.1 per cent and Australia 0.6 per cent. Shanghai blue chips flagged as China’s yuan lost ground to the advancing dollar.
BofA Merrill Lynch’s latest fund manager survey showed a trade war remained the biggest threat cited by 60 per cent of respondents. For now, US companies seem to be profiting from tax cuts as the earnings season shifts into top gear.
Of the 39 companies in the index that have reported so far, 84.6 per cent have beat market expectations. EBay and IBM are among firms reporting after the closing bell.
Against a basket of currencies, the dollar was up at 95.231, after jumping 0.46 per cent overnight. It also climbed to its highest since January against the yen at 113.07.
The euro slipped further to $1.1627, after weakening 0.4 per cent on Tuesday.
The pound suffered after UK inflation data came in weaker than expected, adding to the pressure created when British Prime Minister Theresa May barely cleared the latest parliamentary hurdle to leave the European Union.
Sterling was at a 10-month low of $1.3035, after sliding 0.9 per cent on Tuesday. The rising US dollar coupled with the prospect of higher US interest rates also spelled trouble for gold, which crashed through major chart support to hit a one-year low.
Spot gold was hovering at $1,224.86 per ounce, having fallen to $1,223.78. The steadily less-precious metal is down more than 5 per cent for the year.
Oil prices also eased after an industry group reported an unexpected increase in US crude inventories. Brent fell 70 cents to $71.40 a barrel, while US crude was quoted down 54 cents at $67.55 a barrel.