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Stocks

Global stocks rally as tech shares lead the charge on Wall Street

PUBLISHED : Wednesday, 23 August, 2017, 7:01am
UPDATED : Wednesday, 23 August, 2017, 7:01am

Global equity markets rallied on Tuesday, lifted by mining companies in Europe and surging technology shares on Wall Street, while crude oil rebounded on indications that supply is gradually tightening, especially in the United States.

US stocks surged, with information technology shares rising 1.45 per cent, while European shares snapped a three-day losing streak in a broad advance.

A 2.1 per cent slide in the benchmark S&P 500 index over the past two weeks led investors to step in, said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.

“Every time we get a pullback it’s the same damn thing,” said Dick, calling market conditions the most resilient he has seen in his 18 years. “It’s a ‘buy the dip’ mentality market and it doesn’t go away. They call it a correction now, 2 per cent!”

A gauge of global equity markets, MSCI’s all-country world stock index rose 0.69 per cent, while its emerging markets index gained 0.83 per cent.

Wall Street indexes were also helped by 1.2 per cent gains in materials and health care stocks.

The Dow Jones Industrial Average closed up 196.14 points, or 0.9 per cent, to 21,899.89. The S&P 500 gained 24.14 points, or 0.99 per cent, to 2,452.51, and the Nasdaq Composite climbed 84.35 points, or 1.36 per cent, to 6,297.48.

In Europe, the FTSEurofirst 300 index of leading European shares rose 0.9 per cent.

US Treasury and gold prices fell ahead of an annual meeting this week of central bankers in Jackson Hole, Wyoming. Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are among the scheduled speakers.

A broadly resurgent US dollar prompted investors to square positions in a thin market before the central bank conference, an annual event organised by the Kansas City Fed, begins on Thursday.

With investors caught between a generally benign economic backdrop that prevents too much of a sell-off without a catalyst for new highs, “We do seem to be settling into more of a rangebound market,” said Larry Hatheway, chief economist at asset manager GAM.

The overall blue-chip FTSE 100 equity index closed up 0.94 per cent, as a rally in base metals pushed copper to a three-year high and nickel to its strongest level in eight months on the London Metal Exchange.

Copper rose to US$6,642.50 a tonne, the highest level since November 2014, before paring gains to trade little changed at US$6,584.00, while three-month nickel was bid up 1.2 per cent atUS $11,445 a tonne.

“There’s nothing really fundamental to drive things onwards from here, so I think it’s a bit of misplaced euphoria and trend-following buyers jumping on the bandwagon,” said Robin Bhar, head of metals research at Societe Generale in London.

Europe’s basic resources sector enjoyed a second session of gains and was the top-gaining sector, supported by a rally in iron ore prices.

Benchmark 10-year US Treasury notes were last down 10/32 in price to yield 2.2166 per cent.

Oil prices rose. Benchmark Brent crude settled 21 cents higher at US$51.87 a barrel, while US light sweet crude rose 27 cents to settle at US$47.64 a barrel.

“US crude oil stocks have been falling consistently in recent weeks,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.

The dollar rallied after falling for two straight days, benefiting from the euro’s decline following weaker-than-expected euro zone data as well as investors adjusting positions ahead of the central bank conference in Jackson Hole.

The dollar index rose 0.43 per cent against a trade-weighted basket of its currencies, to 93.497.

The euro slid 0.45 per cent against the greenback to US$1.1761, retracing most of its overnight gains when it posted its biggest single-day rise so far this month.

Spot gold was down 0.43 per cent at US$1,285.20 an ounce.

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