GLOBAL MARKETS-Stocks approach new highs on positive earnings, economic data

April 16
23:04 2019

* Strong healthcare results, forecasts lift Wall Street

* European shares at 6-month high, volatility lowest in 15 months

* Sterling slips on report of stalled Brexit talks

* Oil price rally takes a breather on supply concerns

* Graphic: World FX rates in 2019 (Updates to open of U.S. markets, changes dateline; previous LONDON)

By April Joyner

NEW YORK, April 16 (Reuters) – Stocks around the globe rose on Tuesday to six-month highs after U.S. healthcare companies posted strong earnings and data provided reassurance about economic sentiment in Germany.

Wall Street’s S&P 500 edged higher after Johnson & Johnson beat quarterly profit estimates and raised its sales growth forecast for the year. UnitedHealth Group Inc also beat earnings estimates and increased its adjusted earnings target, though its shares reversed course to trade lower.

“UnitedHealth and Johnson & Johnson raising their forecast is a hugely good thing as heading into the year we thought we might see an earnings pause or an earnings recession,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

In Europe, Germany’s DAX rose 0.7% after the monthly ZEW survey showed the mood improved among German investors for the sixth consecutive month. Britain’s FTSE 100 also strengthened.

The pan-European STOXX 600 index topped its strongest since October, and the MSCI world equity index also rose to a six-month high.

The latest leg higher in this year’s global rally comes as a degree of calm has descended across financial markets. European stock volatility reached its lowest level since January 2018, while on Wall Street, the CBOE Volatility Index hit its lowest level in more than six months.

The rally in equities was tempered, however, by a Reuters report in which European Central Bank sources expressed doubt about a projected euro zone growth rebound.

“After the strong rally we have seen in equities, people are now waiting for the next catalyst,” said Natixis Cross Asset Strategist Florent Pochon. “We do expect some more positive data from Europe, which should give a bit of fresh air (to European assets).”

The U.S.-China trade dispute, signs of slowing global corporate earnings and fears about an economic downturn have weighed on riskier assets in the past year. But investors have been quick to seize on positive news to keep the bull market running.

Among the information investors are anticipating is Chinese quarterly economic growth data, due on Wednesday. After a worrying start to the year, Chinese numbers have been more positive as authorities ramped up stimulus measures, soothing investor fears about a slowdown in the world’s second-biggest economy.

By late morning, the Dow Jones Industrial Average rose 49.41 points, or 0.19%, to 26,434.18, the S&P 500 gained 5.32 points, or 0.18%, to 2,910.9 and the Nasdaq Composite added 31.44 points, or 0.39%, to 8,007.46.

The pan-European STOXX 600 index rose 0.28% and MSCI’s gauge of stocks across the globe gained 0.24%.

As stocks advanced, U.S. Treasury yields rose to four-week highs. Benchmark 10-year notes last fell 9/32 in price to yield 2.5832%, from 2.553% late on Monday.

Spot gold prices dropped to their lowest level this year and were last down 1.0% as risk appetite dented demand for the precious metal’s safe-haven credentials.

In currency markets, sterling slipped 0.4% after the Guardian newspaper reported that talks between Prime Minister Theresa May and the opposition Labor Party regarding Britain’s exit from the European Union had stalled. The Labor Party denied the report.

The euro dipped after the Reuters report on ECB sources questioning forecasts for an economic rebound. The currency later recovered to $ 1.13, down marginally.

The dollar index was little changed.

After a rally to five-month highs on tightening global supplies, crude oil paused on the prospect of Russia and OPEC boosting production to fight for market share with the United States.

Brent crude futures lost 2 cents to $ 71.16 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 12 cents to $ 63.52 a barrel. (Reporting by April Joyner; Additional reporting by Tommy Wilkes and Marc Jones in London, Amy Caren Daniel in Bengaluru and Gertrude Chavez-Dreyfuss, Karen Brettell and Stephanie Kelly in New York Editing by David Holmes, Ed Osmond and Dan Grebler)

Related Articles