World Stocks Hit 19-Month High

EghtesadOnline: World stocks hit a 19-month high on Wednesday, lifted by strong Japanese trade data, stellar European company earnings and hopes that US President Donald Trump will press ahead with a large fiscal spending package.

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27 January 2017

Spanish bank Santander was among the big gainers in Europe, its 4% rise in 2016 net profit giving its share price a similar boost and leading the continent-wide rally in bank stocks, Reuters reported.

MSCI's global share index rose 0.2% to 433.59 points, its highest since June 2015, after two of Wall Street's main indices reached fresh peaks overnight. Europe's index of 300 leading shares and Germany's DAX both rose 1% and Britain's FTSE 100 was up 0.7%.

Japan's Nikkei advanced 1.4%, buoyed by data showing the country's exports rose for the first time in 15 months in December, a positive sign for the economy even as talk of US protectionism looms over the outlook, Financial Tribune reported.

Hong Kong's Hang Seng rose 0.4% to 23,049.12. Sydney's S&P ASX 200 gained 0.4% to 5,671.50 and the Shanghai Composite index added 0.2% to 3,149.55. South Korea's Kospi gained 0.1% to 2,066.94. The Sensex in India added 1.3% to 27,720.31. Benchmarks in Southeast Asia were mostly higher.

US futures pointed to a higher open on Wall Street. On Tuesday the S&P 500 and Nasdaq both rose to fresh record highs and the Dow Jones Industrials came within 51 points of the elusive 20,000 mark.

The benchmark STOXX 600 index was up 1% and poised for its best day in six weeks. The European banking index rose 1.9%, the top riser in the STOXX 600 index.

Trump signed two executive orders on Tuesday to move forward with construction of the Keystone XL and Dakota Access oil pipelines, rolling back key Obama administration environmental actions in favor of expanding energy infrastructure.

He also met chief executives of the Big Three US automakers to push for more cars to be built in the United States.

Bond Yields Up

The dollar snapped its recent losing streak and treasury yields firmed overnight as Trump shifted his focus back to growth initiatives including promising corporate tax breaks to fuel US investment, after focusing on protectionism in his first few days in office.

The 10-year yield inched up to 2.48%, recovering from its dip below 2.40% earlier in the week, while the two-year yield held firm at 1.23%. It was as low as 1.14% on Monday.

While the greenback moved in tandem with the snap back in US Treasury yields overnight, it struggled to make much headway in Asian and European trading.

Lingering concerns about growing protectionism from the Trump administration, and the potential negative effects on global trade and growth, remained close to the surface.

"It has kept dollar/yen flat despite the S&P 500 hitting new highs and treasury yields edging up," Kit Juckes, head of FX research at Societe Generale in London, wrote in a note on Wednesday.

"There's no doubt that a major bout of protectionism-induced risk aversion would be yen-supportive, as well as negative for a bunch of currencies that depend on US trade," he said.

The dollar slipped 0.1% to 113.65 yen, and 0.1% against a basket of currencies. The euro was unchanged at $1.072, little-moved by a surprised fall in German business morale this month.

Germany's 10-year Bund yield rose to a six-week high of 0.38% and France's benchmark 10-year yield hit a one-year high of 0.95%, with bond prices weighed down by the rally in stocks and new debt supply.

Sterling was steady at $1.252 after Britain's Supreme Court ruled that the government would need approval from parliament before formally triggering the country's departure from the European Union.