NEW YORK, Aug 19 — Global equities rose yesterday as strong corporate results and accelerating US homebuilding lifted the S&P 500 past highs set before the coronavirus crushed world economies, in a stimulus-fuelled rally that has also pushed the dollar to two-year lows.
Both the S&P 500 and Nasdaq Composite set records soon after the opening bell following strong sales growth as reported by major US retailers including Walmart, Kohl’s and Home Depot.
The benchmark S&P 500 index topped an all-time peak reached in February just before the onset of Covid-19. The tech-heavy Nasdaq hit a record high for the second consecutive day in a session where declining stocks outnumbered rising shares.
“It’s a reflection that the pandemic has limited longevity and the economic downtown will also have limited longevity,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, who acknowledged many investors are skeptical about a rally that confirms a bull market.
“We feel in about a year or so most of the population will be immunised with a vaccine and the economy will begin to return to accelerated growth,” Ghriskey said.
Historically low interest rates and very accommodative monetary and fiscal policy in the United States and abroad have aided the rally, said William Northey, senior investment director at US Bank Wealth Management in Helena, Montana.
“The policy responses have been incredibly forceful and provided a necessary bridge through this voluntary economic shutdown as we deal with these conditions created by the pandemic,” Northey said.
The near-doubling of online sales in the second quarter helped Walmart Inc trounce Wall Street expectations for quarterly profit and same-store sales.
The S&P slumped to a pandemic low on March 23 and has surged about 55 per cent since then, making the bear market that started in late February the benchmark index’s shortest in history.
The S&P 500 gained 0.23 per cent, led by Amazon.com and the Nasdaq Composite added 0.73 per cent. The Dow Jones Industrial Average fell 0.24 per cent.
In Europe, the broad FTSEurofirst 300 index closed down 0.52 per cent at 1,424.85. MSCI’s world equity index of equity markets in 49 nations rose 1.65 points or 0.29 per cent, to 573.53.
Gold rose more than 1 per cent to climb back above the US$2,000 (RM8,366) level breached earlier this month, as the dollar fell against a basket of major currencies for a fifth consecutive trading day, under pressure from low yields and mostly bleak US economic data.
The Fed’s intervention in financial markets to maintain liquidity in the midst of the coronavirus pandemic has weakened the dollar, pushed risk assets to all-time highs and reduced demand for safe-havens.
The dollar index fell 0.551 per cent, with the euro up 0.53 per cent to US$1.1932. The Japanese yen strengthened 0.60 per cent versus the greenback to 105.38 per dollar.
Spot gold prices rose 0.74 per cent to US$2,000.19 an ounce. US gold futures settled up 0.7 per cent at US$2,013.10.
US housing starts jumped 22.6 per cent in July in the latest sign homebuilding is emerging as one of the few areas of strength in an economy suffering a record slowdown because of the pandemic.
US Treasury yields slid as the market largely snubbed the strong housing data and looked for signs that a political stalemate in Washington over a round of aid was easing.
The benchmark 10-year Treasury note fell 1.8 basis points to yield 0.6655 per cent.
Oil prices settled modestly higher in choppy trade. Brent crude futures rose 9 cents to settle at US$45.46 a barrel. US crude futures settled unchanged at US$42.89 a barrel. — Reuters
