Stocks set new highs, dollar weakens on data
New York — A gauge of global equities rose and shares on Wall Street set new highs on Friday as investors shrugged off the latest missile test by North Korea, while the dollar eased on unexpected weak economic data that dimmed expectations for a US rate hike.
Brent oil prices, the global benchmark, held near five-month highs and were on track for the biggest weekly gain since late July on forecasts for rising demand and the gradual restart of US oil refineries after Hurricane Harvey.
Gold fell after a European Central Bank official called for scaling back the bank’s stimulus program. Losses were capped when weaker-than-expected US retail sales renewed doubts the Federal Reserve will raise rate again in December.
Yields on longer-dated US Treasury maturities briefly added to earlier declines after the weak data revived some concerns about slower economic growth in the third quarter and the likelihood of a Fed rate hike.
Interest rates are lower than at the beginning of the year which is helping lift equities, as is a back-drop of a growing global economy, said Rahul Shah, chief executive of Ideal Asset Management in New York.
"We made it through the summer without a significant correction. As we head into earnings season, there’s a potential for the market to go even higher," Shah said.
Any dip in the equity market because of North Korean missile tests offer a buying opportunity for investors, he said.
"They tend to talk loud with their threats," Shah said about North Korea. "But in terms of the actual commission of those threats, I don’t think it’s destabilising to the market." Japan’s Nikkei closed 0.5% higher.
MSCI’s gauge of stocks across the globe gained 0.14% to set a new high for an index that tracks the performance of more than 2,400 stocks in 47 countries.
On Wall Street, the Dow Jones Industrial Average rose 41.44 points, or 0.19%, to 22,244.92. The S&P 500 gained 1.6 points, or 0.06%, to 2,497.22 and the Nasdaq Composite added 20.27 points, or 0.32%, to 6,449.35.
The pan-European FTSEurofirst 300 index of leading regional shares lost 0.46% to close at a preliminary 1,494.61.
US retail sales unexpectedly fell in August as Hurricane Harvey likely depressed motor vehicle purchases, dropping 0.2% last month. Economists polled by Reuters had forecast retail sales nudging up 0.1%. The disappointing US data, which included industrial output in August, came after a report that showed the strongest increase in consumer prices in seven months.
Benchmark 10-year US Treasury notes fell 1/32 in price to yield 2.2023%. A Eurozone government bond selloff resumed after hawkish rhetoric from a Bank of England policymaker bolstered the notion that central banks across the developed world are moving into tightening mode.
German Bunds last fell 1 basis points in price to yield 0.438%, up from 0.437% late on Thursday.
Brent crude was on track for its third straight weekly gain and the highest weekly rise since the end of July.
US crude fell 0.2% to $49.79 per barrel and Brent was last at $55.51, up 0.07% on the day.
The dollar index fell 0.37%, while the euro up 0.34% to $1.1958. The Japanese yen weakened 0.55% versus the greenback at 110.85 per dollar.
US gold futures fell 0.16% to $1,327.20 an ounce.