BackDollar index gains, moves away from five-week low
Dollar index gains, moves away from five-week low
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New York: Shares rose on Tuesday as a heavy session of data buoyed optimism about growth prospects heading into this week’s three big central bank meetings, while the US dollar rose from its recent five-week low.
A pick-up in euro zone consumer and business confidence gave stock markets the initial boost as they await policy clues from the US Federal Reserve, ECB and Bank of England this week.
The dollar recovered from losses against the yen after US single-family home prices rose in May, though the pace of gains cooled compared to the month before.
“The nearest things on the horizon are the Fed meeting and the jobs number so I think we’re going to tread water here until that," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
The Dow Jones industrial average was up 34.40 points, or 0.22%, at 15,556.37. The Standard & Poor’s 500 Index was up 5.10 points, or 0.30%, at 1,690.43. The Nasdaq Composite Index was up 20.93 points, or 0.58%, at 3,620.07. MSCI’s world index was up 0.2%.
The FTSEurofirst 300 index of top European shares rose 0.1%.
Potash producers and related agriculture companies were volatile on stock markets everywhere after Russia’s Uralkali dismantled one of the world’s largest potash partnerships by pulling out of a venture with Belarus Potash Co.
Uralkali said the decision might lead to a fall in global potash price to below $300 per ton in the second half of 2013, from $400 per ton now.
In New York trade, Mosaic Co fell 20.5%, Potash Corp slid 21.2% and Agrium Inc fell 4.7%.
The dollar continued to edge away from Monday’s five-week low as investors viewed its sharp drop over the last two weeks as a chance to get back in ahead of the Fed meeting and this week’s growth and jobs data. It was last up 0.4%. The dollar was last up 0.3% against the yen.
“I think the Fed is not going to want to rock the boat, but what could change market expectations is the US data that is coming out," said Alvin Tan, FX strategist at Societe Generale.
“It is not only the Fed that is coming up tomorrow, we also have U.S. second quarter GDP, ISM data and on Friday we have non-farm payrolls ... if these come in strong, the market is going to start pricing in a faster tapering cycle again."
Aussie dollar dive
Currency traders were also watching the Australian dollar, which reached a two-week low after hints from the central bank’s governor of another rate cut at next week’s RBA meeting.
“The recent decline in the exchange rate seems to make sense from a macroeconomic perspective," Glenn Stevens told a charity lunch. “It would not be a major surprise if a further decline occurred over time."
Earlier in Asia, Japan’s Nikkei bounced 1.5% as the yen eased, though stocks elsewhere in the region finished flat. China’s central bank’s first injection of funds into money markets since February was balanced by some mixed data.
Commodities stayed under pressure before the Fed meeting and on concerns about China’s outlook. Analysts polled by Reuters before data on Thursday forecast its manufacturing sector may have shrunk in July for the first time in 10 months.
Copper hit a three-week low, gold inched down to $1,322.41 an ounce, and US crude lost 1.26% to below $104 a barrel.
Gold was also hurt by action in the US dollar, as traders shied away from taking big bets ahead of the US Federal Reserve meeting. Gold is priced in US dollars.
German bund futures were little changed before this week’s ECB meeting where the central bank is expected to give some details on its plans to provide “forward guidance" on rates for the first time.
US Treasuries prices rose on Tuesday as traders positioned for the release of second-quarter US economic growth data, the Federal Reserve policy statement and the Treasury’s next refunding announcement, all due on Wednesday.
Benchmark 10-year Treasury notes rose 6/32 in price with their yield easing to 2.58% from 2.61% late on Monday. REUTERS
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