BackUS equities helped by weak dollar; inflation lifts euro
MSCI's all-country world index up 0.4%, pan-European FTSEurofirst 300 index closes off 0.93%
Premium
New York: US stocks rose on Tuesday helped by the dollar’s decline and bond yields rose while investors searched for clarity on Greece’s debt crisis.
The euro rose more than 2% against the dollar, after an above-forecast rise in euro zone inflation pushed the currency through the $1.10 resistance point.
Athens faces a Friday deadline to repay €300 million to the International Monetary Fund. Greece’s creditors are close to finishing a draft agreement to put to the leftist government in Athens, a source close to the talks said on Tuesday, injecting new momentum into long-running negotiations to release aid for the cash-strapped country.
The European Central Bank raised its emergency fund cap for Greek banks, according to a banking source.
“It is all revolving around the climactic situation in Europe," said Ken Polcari, Director of the NYSE floor division at O’Neil Securities in New York.
US stocks were higher even after economic data showed new orders for US factory goods unexpectedly fell in April, the eighth decline in the last nine months.
Wall Street may have been helped by the dollar’s decline, according to Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin.
The Dow Jones industrial average rose 35.3 points, or 0.2%, to 18,075.67, the S&P 500 gained 4.79 points, or 0.23%, to 2,116.52 and the Nasdaq Composite added 13.01 points, or 0.26%, to 5,095.94.
Investors were closely watching the technical support level at the 50-day moving average for the S&P 500 at 2,099.54. The benchmark index touched a session low of 2,099.14 before rebounding.
MSCI’s all-country world index of stock performance in 46 countries was up 0.4%.
The pan-European FTSEurofirst 300 stock index closed off 0.93% while Germany’s DAX fell 0.94%. Athens’ main stock index slumped 2.47%.
Yields on safe-haven German 10-year bonds rose 14.7 basis points to 0.677%, while those on lower-rated Spanish, Italian and Portuguese debt touched their highest of the year after the data showing inflation resumed in the euro zone last month.
US long-dated treasury debt yields rose to two-week highs, drawing support from rising European yields and overall optimism about Friday’s US jobs report.
“This is a European-driven selloff, with a US market looking ahead to this Friday’s non-farm payrolls report," said Tyler Tucci, Treasury strategist, at RBS Securities in Stamford, Connecticut.
The euro was up 2.3% at $1.117 while the dollar was down 1.65% against a basket of major currencies.
The weaker dollar helped oil prices rise, along with expectations that US crude supplies could have fallen again last week for a fifth straight week. Brent crude was up 0.83% at $65.41 a barrel while US crude advanced 1.76% at $61.26. Reuters
Additional reporting by Chuck Mikolajczak and Gertrude Chavez-Dreyfuss in New York.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
