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New York - The dollar fell to the weakest level since June, sparking a rally in commodities from oil to silver that lifted emerging-market assets. The Standard & Poor’s 500 Index closed above 2 100 for the first time since December 1 amid a spate of corporate earnings results.
Energy and materials producers paced gains in equity benchmarks from Europe to the US and Canada, sending global stocks to the highest level in four months. American share indexes were mixed as weak results from Illumina and Netflix sent technology-heavy gauges lower, while reports from Goldman Sachs Group and Johnson & Johnson boosted the Dow Jones Industrial Average.
A labour strike in Kuwait bolstered crude, silver surged to its strongest level since June and Argentina returned to the international debt markets.
Equities have rebounded with oil over the past two months as data pointed to a stabilisation of Chinese growth, US companies reported better-than-expected earnings and the Federal Reserve signalled a slower pace of interest-rate hikes. That’s easing volatility across financial markets, boosting demand for higher-yielding assets and opening the door for emerging-market debt sales from Abu Dhabi to Argentina.
Corporate results have led to outsize moves in individual shares, damping the influence of commodities on equities.
“The recession talk from February is off the table and we’re also seeing stability in China which is helping global commodities in general,” Mark Kepner, an equity trader at Themis Trading in Chatham, New Jersey, said in a phone interview.
“Bank earnings show they’re having a rough time with investment banking but that’s not the main street economy. People are looking at consumer loans going up and now thinking the glass is half full.”
Stocks
The S&P 500 rose 0.3% to 2 100.78 in New York, topping that level for the first time in four months. The Dow added to its highest level since July. The Nasdaq 100 fell 0.6%, dragged lower by Netflix and Illumina, which lost at least 12%.
Earnings are in focus, with Johnson & Johnson edging higher after reporting results that beat analysts’ estimates on strong pharmaceutical sales. Goldman Sachs Group rose 2.3% after profit topped estimates. IBM tumbled 5.6% for the worst performance in the Dow.
The Stoxx Europe 600 Index jumped 1.5% to its highest close since January, amid gains in miners and better-than-forecast sales from Danone and L’Oreal SA.
Energy producers led emerging-market stocks to a five-month high, with PetroChina and Lukoil PJSC of Russia lifting a gauge of oil companies. The MSCI Emerging Markets Index has risen 7.6% this year and is valued at 12 times projected 12-month earnings. That compares with a 1.4% increase in the MSCI World Index, which trades at a multiple of 16.
Bonds
Treasuries fell, with the yield on benchmark 10-year Treasury notes rising one basis point to 1.78%. Bonds slipped as Federal Reserve Bank of Boston President Eric Rosengren said on Monday he and many private-sector economists envision a “much healthier U.S. economy” than the forecast implied by financial markets.
Argentina boosted the size of its planned bond sale to $16.5bn on Tuesday and lowered its target interest rate for the 10-year notes it’s issuing after marketing the deal to investors, according to a person familiar with the matter. The 7.5% proposed yield for the 10-year bond would be less than similarly-rated securities pay.
Lebanon raised $1bn from a two-part bond sale as the most indebted Arab nation sought cash to retire two maturing securities. Abu Dhabi, the capital of the United Arab Emirates, is sounding out investors about plans to issue bonds for the first time in more than seven years, according to a person with knowledge of the plan.
Currencies
Currencies of commodity-exporter nations such as New Zealand and Australia rose among Group-of-10 counterparts, both reaching levels not seen in 10 months versus the dollar, after oil advanced for the first time in five days and European stocks rallied to a three-month high.
The euro rose 0.6% to $1.1380, after climbing 0.3% on Monday amid speculation the European Central Bank will refrain from further monetary easing at an April 21 policy meeting. A measure of German investor expectations rose to the highest since December.
The yen weakened 0.3% to 109.12 per dollar, extending its retreat from a 17-month high of 107.63 reached last week.
The MSCI Emerging Markets Currency Index rose 0.9%, poised for the highest since July 29 based on closing prices. South Korea’s won rose to a five-month high as the Bank of Korea held its benchmark rate at a record low. South Africa’s rand appreciated 1.2% and touched the strongest level since December 4.
Crude oil climbed 2.3% to $43.90 a barrel in London, as a labour strike that started on Sunday in Kuwait, OPEC’s fourth-biggest member, reduced the nation’s output by 60% to 1.1 million barrels a day. West Texas Intermediate rose 3.1% to $41.01 a barrel in New York.
Silver futures entered a bull market after prices jumped to a 10-month high and as investors pile into precious metals, with top forecasters’ staying positive on gold. Silver soared 4.4% to settle at $16.972 per ounce, the highest since June 2. The metal has gained 21% this year, the best performing asset in the Bloomberg Commodity Index.
Gold futures jumped 1.5% to $1 253.70 an ounce in New York. Iron ore extended its rally above $60 a metric ton as steel prices in China surged.
