Wall Street rises as worries over Catalan independence recede for now

PUBLISHED : Wednesday, 11 October, 2017, 7:49am
UPDATED : Wednesday, 11 October, 2017, 7:50am

Stocks around the world rose on Tuesday as Wall Street eked out record highs ahead of earnings season, while US Treasury prices pared gains after Catalonia’s leader allowed for talks with Madrid by suspending a declaration of independence from Spain.

Oil futures rose on signs of supply rebalancing, helping shares in energy companies.

The dollar lost ground and the euro climbed to its highest in a week on strong data and monetary policy commentary as well as speculation on the Catalan situation.

The euro saw a small pullback when Catalan leader Carles Puigdemont said the effects of independence would be suspended to allow for talks with the Madrid government.

“Anything that shows Catalonia is open to talks would be well received by European assets,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

Catalan leader delays call for independence to negotiate with Spain

IBEX 35 Index futures were up 1.1 per cent on Tuesday afternoon after Madrid’s IBEX stock index closed down 0.9 per cent in the regular session.

The three major Wall Street indexes scaled record highs, helped by gains in energy stocks and a 4.5 per cent rise in shares of Wal-Mart on the back of the company’s US$20 billion share buy-back plan.

The Dow Jones Industrial Average rose 69.61 points, or 0.31 per cent, to close at 22,830.68, the S&P 500 gained 5.91 points, or 0.23 per cent, to 2,550.64 and the Nasdaq Composite added 7.52 points, or 0.11 per cent, to 6,587.25.

MSCI’s gauge of stocks across the globe gained 0.44 per cent.

“If you really want to be bearish about this market, there’s no shortage of macro events you could point to whether it’s North Korea or China, Catalonia or the Trump dynamics. So far the market has looked through every one of them,” said Nathan Thooft, senior managing director in asset allocation at Manulife Asset Management in Boston.

“It’s this game of looking at macro events versus actual fundamentals, and fundamentals are driving the market,” said Thooft, who expects earnings to beat expectations.

The dollar index, which tracks the greenback against a basket of major currencies, fell for the third day in a row. It fell 0.48 per cent, with the euro up 0.66 per cent to US$1.1817.

On top of strong German export data, traders were also upbeat after one of the European Central Bank’s German policymakers called for an end to its stimulus.

The Catalan news also pared US Treasuries gains. Benchmark 10-year notes was last up 6/32 in price to yield 2.3481 per cent, from 2.368 per cent late on Monday. The 30-year bond was last up 14/32 in price to yield 2.884 per cent, from 2.906 per cent late on Monday.

“They temporarily kicked the can (down the road) on Catalonia,” said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.

In commodities, Brent oil prices pushed higher supported by Saudi export cuts in November and comments from Opec and trading companies that the market is rebalancing after years of oversupply.

US crude settled up 2.7 per cent while Brent settled 1.5 per cent higher. US crude was last up 2.76 per cent to US$50.95 per barrel and Brent was last at US$56.58, up 1.42 per cent on the day.

Gold prices also hit their highest in more than a week against the backdrop of a weaker dollar although expectations for another US interest rate hike capped gains. Spot gold added 0.3 per cent to US$1,287.70 an ounce.