Global shares hit two-month high, dollar firms as Trump speech nears

President Donald Trump was due to give his State of the Union speech today, with investors awaiting indications of progress in US-China trade talks and watching for signs of tensions with Democrats following a 35-day partial federal government shutdown. — Reuters pic
President Donald Trump was due to give his State of the Union speech today, with investors awaiting indications of progress in US-China trade talks and watching for signs of tensions with Democrats following a 35-day partial federal government shutdown. — Reuters pic

NEW YORK, Feb 6 — World stocks rose to a fresh two-month high yesterday to keep up their fast start to 2019 while the US dollar strengthened for a fourth straight session as investors looked toward an annual address by the US president later in the evening.

Boosted by US and European equity performance, MSCI’s gauge of stocks across the globe gained 0.64 per cent, increasing for a sixth straight session as it hit a two-month high.

President Donald Trump was due to give his State of the Union speech at 2100 ET (10am Wednesday, Malaysia Time), with investors awaiting indications of progress in US-China trade talks and watching for signs of tensions with Democrats following a 35-day partial federal government shutdown.

The Federal Reserve’s dovish recent statement on interest rate policy, along with optimism over US-China tensions, has fuelled recent risk appetite, even as estimates for US corporate earnings have been falling.

“We could move significantly higher if the geopolitical environment improves, and we could also decline if things break down,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. “There will be lots of hints tonight about the US political landscape.”

On Wall Street, the Dow Jones Industrial Average rose 172.15 points, or 0.68 per cent, to 25,411.52, the S&P 500 gained 12.83 points, or 0.47 per cent, to 2,737.7 and the Nasdaq Composite added 54.55 points, or 0.74 per cent, to 7,402.08.

Shares of Estée Lauder Cos and Ralph Lauren reacted favourably to the companies’ respective quarterly reports.

“The main focus of the market has just been that people are getting more comfortable that the prices for stocks are reasonable,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

Fourth-quarter earnings for companies on the benchmark S&P 500 index were on track to have climbed 15.8 per cent, but profit in the first quarter is now expected to rise by only 0.4 per cent, according to IBES data from Refinitiv.

The pan-European STOXX 600 index rose 1.41 per cent, helped by a recovery in banks and a solid update from BP.

The dollar index, which measures the greenback against a basket of currencies, rose 0.21 per cent, up for a fourth straight session, with the euro down 0.23 per cent to US$1.1409 (RM4.67).

Continued recovery in investors’ appetite for risk taking exerted pressure on safe-haven currencies, dragging the Swiss franc to an 11-week low against the dollar.

US Treasury yields fell as investors priced in the Fed’s dovish interest rate outlook amid an uncertain global economic outlook.

“Yields are consolidating around levels that are more consistent with the new position at the Fed,” that it could effectively hold rates steady over the next six months, said John Herrmann, rates strategist at MUFG Securities in New York.

Benchmark US 10-year Treasury notes last rose 7/32 in price to yield 2.7001 per cent, from 2.724 per cent late Monday.

Oil prices pulled back from two-month highs as concerns over a global economic slowdown crept back into the market and a stronger dollar also weighed.

US crude settled down 1.7 per cent at US$53.66 a barrel, while Brent settled at US$61.98 a barrel, down 0.9 per cent. — Reuters

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