US stocks near record high, European yields slip further

New York: Major US stock indexes rose on Wednesday with the Standard & Poor’s 500 holding around the 2,000 milestone, while bets the European Central Bank (ECB) is on the brink of injecting more stimulus knocked the region’s government bond yields to record lows.

Prospects the ECB might buy bonds similar to what the US Federal Reserve has done to help the euro zone economy drove the euro to its weakest against the dollar in a year and stoked a rise in European share prices for a third day.

Among key commodities, Brent crude oil rose towards $103 a barrel on reduced supply from a large oil field in the North Sea due to additional maintenance. Gold notched higher as the dollar retreated against a basket of major currencies.

Investors were wary about piling into equities and other risky assets after Ukraine accused Russian forces of a fresh military incursion across its border, a day after heads of both nations agreed to work towards ending the separatist war in the eastern part of the country.

“Global sovereign bonds and global equities are continuing to rally together, which is clearly unsustainable in the short term,” said Michael Woolfolk, global markets strategist at BNY Mellon in New York.

Shortly after they opened, the Dow Jones industrial average was up 4.3 points, or 0.03%, to 17,111, the S&P 500 was up 0.07 point to 2,000.09 and the Nasdaq Composite was down 0.23 point, or 0.01%, to 4,570.41.

The pan-European FTSEurofirst 300 index inched up 0.1% at 431.97 points. Tokyo’s Nikkei ended up 0.1% at 15,534.82.

The MSCI world equity index, which tracks shares in 45 nations, rose 0.37% or 0.09%, to 432.01.

Fuelling the speculation of ECB easing, Italian economy minister Pier Carlo Padoan said Italy must lower its growth forecast for this year, and German consumer sentiment fell for the first time since early last year.

ECB president Mario Draghi’s call last week for more action in both monetary and fiscal policy has markets betting further steps may come as soon as its next policy meeting on 4 September.

The yield on the benchmark German Bund fell over 4 basis points to a record low of 0.90%. Yields fell across the euro zone with 10-year Italian and Spanish yields at 2.36% and 2.10%, respectively.

As borrowing costs in the 18-nation block set record lows, its shared currency broke to an 11-month low of $1.3152 in Asian trade on Wednesday before recovering some ground to $1.3180 in US trade, up 0.1% on the day.

The rebound in the euro led the dollar index lower, down 0.2% at 82.504.

As the greenback softened against major currencies, gold rose 0.2% at $1,283.50 an ounce.

Oil prices recovered some of their recent losses. Brent crude was up $0.30 or 0.29%, at $102.8 a barrel. US crude was last up $0.19 or 0.2%, at $94.05. Reuters

Jamie McGeever, Nigel Stephenson, John Geddie and Anirban Nag in London and Wayne Cole in Sydney also contributed to this story.