MSCI’s global stock index rose yesterday, recouping some losses from the previous session’s late-session sell-off, while oil prices fell and the dollar hit its lowest point in a week on the eve of a key US inflation reading.
Oil prices, which rallied earlier in the week due to concerns about shipping disruption in the Red Sea, fell after Angola announced it is leaving the Organisation of the Petroleum Exporting Countries (Opec).
On Wednesday, Wall Street suffered its biggest drop since September, and analysts cited hedging activity associated with trading in short-dated options.
“Today’s market is trying to recover. This has been the hallmark of the latest phase in the market,” said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, NC.
“We’ve seen the fear of missing out has been powerful. We’ve institutional money managers who have to catch up if they’ve been behind competitors.”
Investors also reacted positively to yesterday’s data which showed third-quarter US economic growth was not as robust as originally stated. Cracks were also appearing in the tight labour market, which the Federal Reserve considers an obstacle to cooling inflation.
“The fact that the third-quarter GDP number wasn’t revised upward, and in fact was cut, is giving investors comfort that the path the Fed is on, which they enunciated last week, isn’t going change any time soon,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
Also, investors were keenly awaiting the Personal Consumption Expenditure (PCE) index report due out today, and appeared to be betting it would confirm easing inflation.
If expectations are for a faster decline in inflation than economists have forecast “perhaps you’d want to come in today rather than wait until tomorrow,” LPL’s Krosby said.
After Wednesday’s sell-off, traders were cautious heading into the market close. Joe Mazzola, director of trading services education at Schwab said it was important for the S&P to stay above Wednesday’s lows as it could bode “well for the end of the week, heading into next week.”
All three US indexes gained steam to hit session highs late in the trading day.
On Wall Street, the Dow Jones Industrial Average closed up 322.35 points, or 0.87 per cent, to 37,404.35. The S&P 500 gained 48.4 points, or 1.03 per cent, to 4,746.75 while the Nasdaq Composite added 185.92 points, or 1.26 per cent, to end the session at 14,963.87.
While the pan-European STOXX 600 index had closed down 0.21 per cent earlier in the day, MSCI’s gauge of stocks across the globe gained 0.72 per cent.
The US dollar eased to its lowest point since December 14 against a basket of currencies as the previous session’s lift for the US currency faded and traders waited for the US inflation figures and for clues on future Fed policy.
The dollar index fell 0.605 per cent, with the euro up 0.59 per cent to US$1.1003.
The Japanese yen strengthened 0.95 per cent versus the greenback at 142.23 per dollar, while Sterling was last trading at US$1.2686, up 0.39 per cent on the day.
In US Treasuries, benchmark 10-year notes were up 1.5 basis points to 3.892 per cent, from 3.877 per cent late on Wednesday.
The 30-year bond was last up 2.9 basis points to yield 4.0344 per cent, from 4.005 per cent. The 2-year note was last was down 1.5 basis points to yield 4.3537 per cent, from 4.369 per cent.
Oil futures settled lower as Angola’s move raised questions about Opec’s efforts to support prices by limiting global supplies.
US crude settled down 0.44 per cent at US$73.89 per barrel and Brent finished at US$79.39, down 0.39 per cent on the day.
Gold prices gained after US economic data fuelled expectations for the Federal Reserve to cut interest rates in March next year.
Spot gold added 0.7 per cent to US$2,044.30 an ounce. US gold futures gained 0.49 per cent to US$2,044.50 an ounce. — Reuters
