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Global stocks climb, shrugging off inflation data; dollar falls

Reuters  |  NEW YORK 

By Herbert Lash

(Reuters) - World equity markets surged anew on Thursday as investors shrugged off the latest sign of rising U.S. inflation, while strong global growth weighed on the dollar and pushed it to a 15-month low against the Japanese yen.

U.S. prices accelerated in January, according to a Labor Department report that offered further evidence of growing pressures in the world's largest

The report came on the heels of data on Wednesday showing a broad increase in U.S. consumer prices last month.

Faster inflation, which reduces the return of fixed income, spooked the bond market and had sparked a selloff in equities on Wednesday. But stocks later rallied on the notion that strong economic growth can offset moderate

An index of world stock markets advanced more than 1 percent and major European indexes also rose, bolstered by strong results from SE, the region's largest firm.

On Wall Street rose after Warren Buffett's disclosed in a regulatory filing that the maker is now its top common stock investment.

was among other that rose, after its strong quarterly results and upbeat forecast.

Leo Grohowski, in New York, said he was encouraged by the reaction to the data.

"There were a lot eyes fixating on the PPI number this morning, it came in a little hot. But much like yesterday, the market's shaking it off," Grohowski said.

The equities selloff two weeks ago after an initial sign of an uptick in had overshadowed earnings that are so strong estimates may need to be revised upward, he said.

"We're taking our earnings estimates and looking at them and saying we just increased them six weeks ago, but you know what? They're feeling pretty conservative to us," Grohowski said.

Of the 383 companies in the index that have reported fourth-quarter earnings, 76.5 percent have beat analysts' expectations, according to I/B/E/S.

MSCI's all-country world index closed up 1.22 percent in a fifth straight session of gains while the index of leading shares in gained 0.44 percent to close at 1475.50.

The Dow Jones Industrial Average rose 306.88 points, or 1.23 percent, to 25,200.37, the gained 32.57 points, or 1.21 percent, to 2,731.2 and the Nasdaq added 112.82 points, or 1.58 percent, to 7,256.43.

Rising interest rates need not be a worry as long as the is growing and the fundamental outlook does not change, Grohowski said.

"The market's growing increasingly comfortable that maybe 3 percent on a 10-year Treasury note is OK," he said.

The 10-year note rose 1/32 in price to push yields down to 2.9077 percent. Earlier in the session yields had shot up to 2.944 percent.

The gap between German and U.S. 10-year borrowing costs reached its widest since April after the higher-than-expected U.S. data triggered a sharp selloff in U.S. Treasuries earlier in the day.

While investors also shed bonds after Wednesday's data, political risks kept a cap on yields.

German 10-year government bond yields were a basis point higher at 0.76 percent.

The dollar fell across the board. "Forex markets rotate from theme to theme all the time. The theme right now is global growth and strong global growth has historically pushed the dollar lower," said Greg Anderson, at in

The dollar index fell 0.57 percent, with the euro up 0.39 percent to $1.2497. The Japanese yen strengthened 0.87 percent versus the greenback at 106.10 per dollar.

were mixed. Brent pared losses and U.S. crude rebounded on a weak dollar and Saudi Arabia's comments that and other producers were committed to cutting supplies, which offset record U.S. production and rising inventories.

U.S. crude output hit a record 10.27 million barrels per day, the said on Wednesday, making the a bigger than U.S. crude and gasoline inventories rose last week, U.S. data showed.

Brent futures fell 3 cents to settle at $64.33 a barrel, while U.S. Intermediate crude settled up 74 cents at $61.34.

U.S. gold futures for April delivery settled down $2.70 at $1,355.30 per ounce.

(Reporting by Herbert Lash; Editing by and Meredith Mazzilli)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, February 16 2018. 03:31 IST