NEW YORK, March 2 ― A global equity index scaled a record high while Treasury yields fell sharply yesterday after weak US economic data and comments from Federal Reserve officials bolstered expectations for interest rate cuts later this year.

The Institute for Supply Management (ISM) said its manufacturing PMI fell to 47.8 last month from 49.1 in January, the 16th straight month that the PMI remained below 50. This indicates contraction in manufacturing.

The University of Michigan surveys of consumers showed all three measures for sentiment, current conditions and consumer expectations falling more than expected.


Also yesterday, Fed Governor Chris Waller kindled hopes for lower interest rates, saying decisions about the ultimate size of the Fed balance sheet have no bearing in its inflation fight rate policy.

On Thursday, the US personal consumption expenditures (PCE) report was in line with expectations and showed annual inflation growth the smallest in three years.

“When you take all of it together, you're seeing the balance tilting a little bit more toward the likelihood of there being more rate cuts, which has supported equities,” said Sinead Colton Grant, chief investment officer at BNY Mellon Wealth Management.


She also said equities drew support from a stronger-than-expected earnings season and enthusiasm about artificial intelligence.

Investors appeared to shrug off a note of caution from Richmond Federal Reserve President Thomas Barkin, who said US price pressures still exist and it is too soon to predict when the Fed will cut rates.

On Wall Street, the S&P 500 closed at a record high for the second day in a row, with a strong boost from the technology sector and falling Treasury yields adding to bullishness.

The Dow Jones Industrial Average rose 90.99 points, or 0.23 per cent, to 39,087.38, the S&P 500 gained 40.81 points, or 0.80 per cent, to 5,137.08 and the Nasdaq Composite gained 183.02 points, or 1.14 per cent, to 16,274.94.

MSCI's gauge of stocks across the globe rose 5.81 points, or 0.76 per cent, to 767.09 and hit a record high.

The STOXX 600 index closed up 0.6 per cent after Eurostat figures published showed inflation across the 20-nation euro zone eased to 2.6 per cent in February from 2.8 per cent a month earlier.

Global factory surveys showed manufacturing output had continued to fall in both Europe and Asia.

And in Asia, Japan's Nikkei index jumped 1.9 per cent to hit a fresh all-time high, extending a surge of 7.9 per cent the previous month when it breached levels last seen in 1989.

In US Treasuries, yields fell sharply including two-year yields' biggest daily decline since the end of January after the manufacturing data and Waller's suggestion of the need for more shorter-dated Treasuries.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 11.1 basis points to 4.5354 per cent, from 4.646 per cent late on Thursday.

The yield on benchmark US 10-year notes fell 6.6 basis points to 4.186 per cent, from 4.252 per cent while the 30-year bond yield fell 4.7 basis points to 4.3285 per cent from 4.375 per cent late on Thursday.

In currencies, the dollar fell against the euro on weaker-than-expected US economic data but gained against the Japanese yen after Bank of Japan governor Kazuo Ueda said it was too soon to declare victory on inflation.

The dollar index, which measures the greenback against a basket of major currencies, fell 0.2 per cent at 103.91, with the euro up 0.28 per cent at US$1.0833 (RM5.12).

Against the Japanese yen, the dollar strengthened 0.09 per cent to ¥150.12.

In cryptocurrencies, bitcoin rose 2.36 per cent to US$62,898.00 after hitting a more than two-year high of US$63,933 on Wednesday.

In commodities, oil prices settled higher and posted weekly gains as traders awaited an Opec+ decision on supply agreements for the second quarter while they weighed US, European and Chinese economic data.

US crude settled up 2.2 per cent at US$79.97 a barrel and Brent finished at US$83.55 per barrel, up 2 per cent on the day.

In metals, gold started the month on a positive note, with prices rising to a two-month high the muted economic data.

Spot gold added 1.97 per cent to US$2,083.41 an ounce. ― Reuters