What you need to know
• European equities inch higher but momentum fades from Wall St records
• Hong Kong stocks hit 10-year high, powered by strong earnings
• Consumer and energy stocks rise as traders seek to lock in recent gains
• Dollar continues to drift as Thanksgiving holiday looms
• Oil rallies after US inventories drop
“Investors appear to be making one last push to put cash to work before shutting up shop for the year end, with the US holiday season looming close,” says Paul Hatfield, global co-chief investment officer at Alcentra, part of BNY Mellon Investment Management.
“After the surge in tech stocks, healthcare appears to be back in favour, having taken a bit of a beating recently, with investors looking for relative value in this sector now. With the UK Budget, we expect little in the way of blockbuster announcements beyond a few targeted giveaways. If it is not seen as at least stabilising the government’s position, sterling could come under pressure again.”
European stocks are ticking up, but the momentum of the rally in global stock markets is fading in the region, having taken US indices to fresh records and Hong Kong stocks to a decade high.
The Euro Stoxx 600 is up 0.1 per cent, with Frankfurt’s Xetra Dax 30 stronger by 0.2 per cent and London’s FTSE 100 also up 0.1 per cent.
There is a more defensive feel to trade as investors seek to protect gains of about 1 per cent over the week, although energy, financial and consumer stocks remain in demand. Technology stocks are slipping, with the Euro Stoxx tech index down 0.2 per cent, after a rise of more than 2 per cent over the last two sessions.
The S&P 500 briefly broke through the 2,600 level on Tuesday to an all-time intraday high, buoyed by the technology and healthcare sectors. It closed 0.7 per cent higher at a record 2,599. Technology and retail stocks were in strong demand ahead of the US holiday season, which begins on Thursday with Thanksgiving, when New York markets will be closed.
Hong Kong’s Hang Seng closed over the 30,000 points level for the first time in 10 years. The index was up 0.6 per cent, lifted by energy and financial stocks. In mainland China the Shanghai Composite is 0.6 per cent higher.
Japan’s Topix index is up 0.3 per cent higher, with information technology stocks and industrials climbing.
The dollar index is drifting lower — down 0.1 per cent at 93.810 — as the proximity of the Thanksgiving break makes any announcements on US tax reform unlikely for the time being. The prospect of the stimulus effect from lower taxes has helped the dollar rise almost 3 per cent from its nadir for the year, touched in September.
The euro is up 0.2 per cent at $1.1755, while the pound is ticking 0.1 per cent higher at $1.3245 ahead of the UK Budget.
The Japanese yen is 0.2 per cent stronger at ¥112.21.
The yield on the 10-year US Treasury is flat at 2.35 per cent as investors remain comfortable buying into stocks. Germany’s 10-year Bund yield is down 1bp at 0.342 per cent, and UK gilts over the same period are yielding 1.26 per cent, down 1.2 basis points.
US oil benchmark West Texas Intermediate is up 1.9 per cent and at its highest intraday level in two weeks at $57.93 a barrel, after the American Petroleum Institute reported inventories dropped last week and ahead of an Opec meeting next week, where members are expected to decide on whether to extend supply cuts.
Brent crude, the international marker, is 1.2 per cent higher at $63.31 a barrel.
Michael Hunter in London and Alice Woodhouse in Hong Kong