Global stocks hit record highs, dollar rises on rate-hike view
New York — Stock prices across the world climbed to record highs on Tuesday on news eurozone business activity accelerated to its swiftest pace in six years, while the dollar gained on the view the Federal Reserve might raise interest rates in March.
The revived possibility of a US rate hike next month, together with demand for risky assets, propelled bond yields higher but weakened gold prices.
Oil futures rose more than 1% after Opec said it was sticking to its deal to reduce output.
The rally in equity markets around the globe, led by Wall Street, has been stoked by hopes of tax cuts, infrastructure spending and looser regulations from US President Donald Trump and a Republican-controlled Congress.
Details on US fiscal stimuli remained sketchy, but investors seemed patient for progress on these possible programs as they have been assuaged by upbeat company results.
"It does seem like a rally feeding on itself. People are reluctant to sell into this rally," said John Canavan, market strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.
MSCI’s world stock index which tracks shares in 45 nations, rose 1.32 points or 0.3%, to 445.78 after touching an all-time peak at 445.82.
On Wall Street, the Dow Jones Industrial Average rose 113.02 points, or 0.55%, to 20,737.07, the S&P 500 gained 13.55 points, or 0.58%, to 2,364.71 and the Nasdaq Composite added 25.06 points, or 0.43%, to 5,863.64.
The three US stock indexes hit record intraday highs, led by stronger-than-forecast results from retailers Wal-Mart, Macy’s and Home Depot.
Europe’s benchmark index of 300 leading shares touched its highest since Dec. 2015, last up 0.7% at 1,473.28 points. Purchasing manager index (PMI) reports showed the eurozone economy expanding much faster and more smoothly than expected.
The FTSEurofirst 300 index reversed an earlier fall, precipitated by Europe’s biggest bank HSBC’s surprise 62% drop in annual profits.
Stronger appetite for equities and chances of another US rate increase in the coming months pushed up the dollar index by 0.5% at 101.46.
Philadelphia Fed President Patrick Harker told Market News International on Monday he would likely support a quarter point rate increase at the central bank’s March 14-15 meeting.
US 10-year Treasury yield was up 1 basis point at 2.433%, while German 10-year Bund yield was up nearly 2 basis points at 0.317%. In the oil market, Brent crude was last up $0.52, or up 0.93%, at $56.7 a barrel. US crude was last up $0.73, or up 1.37%, at $54.13 per barrel.
Spot gold prices fell $3.94 or 0.32%, to $1,234.06 an ounce.