Global stocks rally for a second day, setting aside trade fears

Traders work on the floor of the New York Stock Exchange, (NYSE) in New York. — Reuters pic
Traders work on the floor of the New York Stock Exchange, (NYSE) in New York. — Reuters pic

NEW YORK, Sept 20 ― World stock markets rallied for a second straight day yesterday, while safe-haven assets such as US bonds and the Japanese yen slipped to multi-week lows on bets the ongoing US-China trade spat would inflict less damage than feared.

gained on trade-sensitive materials and auto stocks, while on the S&P 500 and the Dow industrials were buoyed by US on the back of higher Treasury yields. The Dow hit its highest close since late .

A drop in Microsoft pressured the Nasdaq and disappointing results in Europe from staffing firm Adecco and home improvement retailer Kingfisher weighed on indexes.

MSCI’s gauge of equity markets in 47 countries gained 0.36 per cent and the pan-European FTSEurofirst 300 index closed up 0.33 per cent to two-week highs.

The big question for investors was whether the rest of the world will rejoin the United States in global synchronised growth or if ongoing trade tensions and tighter monetary policy finally slow the US economy, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

“That kind of dilemma is really what investors face and trade seems to be the wild card in all this,” Arone said.

Investors were underestimating the boost stocks are gaining from the massive US fiscal policy package that far outweighs any trade penalties that have been put forward, he said.

The repatriation of corporate profits this year is likely to be US$700 billion (RM2.89 trillion), individual and corporate tax cuts US$200 billion and the government has boosted spending by US$100 billion, Arone said.

“That’s US$1 trillion of fiscal stimulus. I think the effects of that continue to be under-appreciated by investors,” he said.

On Wall Street, the Dow Jones Industrial Average rose 158.8 points, or 0.61 per cent, to 26,405.76. The S&P 500 gained 3.64 points, or 0.13 per cent, to 2,907.95 and the Nasdaq Composite dropped 6.07 points, or 0.08 per cent, to 7,950.04.

US 10- and 30-year Treasury debt yields hit fresh four-month highs after a report that US homebuilding increased more than expected in August.

Housing starts rose 9.2 per cent last month, a positive sign for the housing market which has underperformed the broader economy amid rising interest rates for home loans.

The strong data pushed 10-year US Treasury note yields to a high of 3.092 per cent and 30-year yields to a high of 3.248 per cent, extending a three-day rise in yields.

The dollar slid against the euro and fell to the lowest in nearly three weeks against the risk-sensitive Australian dollar as the latest US- trade tensions failed to unnerve investors.

The dollar index, which measures the greenback against a basket of six other major currencies, fell 0.09 per cent to 94.553.

The euro rose 0.07 per cent to US$1.1673 and the Japanese yen fell 0.08 per cent versus the greenback at 112.26 per dollar.

US oil futures rose more than US$1 a barrel on a fifth weekly crude inventory drawdown and strong domestic gasoline demand amid ongoing supply concerns over US sanctions on Iran.

crude oil held near its highest this year on concerns producers may fail to cover a supply shortfall once the US sanctions take effect in November.

Brent crude futures rose 37 cents to settle at US$79.40 a barrel while US crude prices rose US$1.27 to settle at US$71.12.

Bullion bounced as the dollar weakened, indicating investors are starting to worry about the impact of the US-China trade war on the US economy, luring some buyers back into investments.

US gold futures for December delivery settled up US$5.40 at US$1,208.30 per ounce. ― Reuters

Source: The Malay Mail Online

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