A gauge of world equity markets rose and the dollar eased on Tuesday after a tame reading on U.S. inflation reinforced expectations the Federal Reserve will not raise interest rates anytime soon, while Boeing shares slid for a second day.
U.S. consumer prices rose for the first time in four months in February but the modest pace of the increase resulted in he smallest annual gain in inflation in nearly 2-1/2 years.
In the 12 months through February, the CPI rose 1.5 per cent, well under the Fed’s target of 2 per cent, leading the dollar to slip against the euro and the dollar index of leading U.S. trading partners to fall. Gold gained on the weaker greenback.
“The takeaway from the data was that inflation is in check and that would allow the Fed to remain patient and that is always good for equities,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance in Charlotte, North Carolina.
Boeing Co. slumped 6.2 per cent to extend Monday’s losses as more countries, including all of the European Union, grounded the company’s 737 MAX planes following a second fatal crash in five months.
Rival airplane manufacturer Airbus SE was the biggest contributor to advancing shares in the FTSEurofirst 300 of leading European shares, rising 1.43 per cent, but the index edged lower in choppy trade as investors awaited a Brexit vote.
British lawmakers crushingly rejected Prime Minister Theresa May’s deal to quit the European Union on Tuesday, thrusting Brexit into turmoil just 17 days before the planned departure date.
In Toronto, the S&P/TSX composite index unofficially closed higher by 30.42 points, or 0.19 per cent, at 16,136.66.
Materials stocks jumped 1.3 per cent as gold prices rose, while energy stocks rose 0.6 per cent with higher oil prices.
Industrial stocks weighed on the index, falling 0.8 per cent as airline companies fell with Boeing. Air Canada dipped 4 per cent, while WestJet Airlines Ltd. was down 3.2 per cent.
MSCI’s all-country world index of equity performance in 47 countries rose 0.61 per cent, while the pan-European STOXX 600 index lost 0.06 per cent.
On Wall Street, the Dow Jones Industrial Average fell 94.32 points, or 0.37 per cent, to 25,556.56, the S&P 500 gained 8.41 points, or 0.30 per cent, to 2,791.71 and the Nasdaq Composite added 32.97 points, or 0.44 per cent, to 7,591.03.
The Mexican peso and Canadian dollar gained on the tame U.S. inflation data as the dollar index fell 0.3 per cent and the Japanese yen weakened 0.04 per cent versus the greenback at 111.29 per dollar.
The euro gained 0.44 per cent to $1.1297.
U.S. Treasury yields drifted lower after the inflation data.
U.S. long-dated yields have fallen in six of the last seven sessions, while those on two-year notes, the security most sensitive to interest rate moves, dropped in five of the last seven.
Benchmark 10-year U.S. Treasury notes rose 11/32 in price to push the yield down to 2.6015 per cent.
Oil prices edged slightly higher on Tuesday, supported by signs of tightening global supply after a Saudi official said the kingdom plans to cut oil exports in April, while the U.S. government reduced its forecast for domestic crude output growth.
Saudi Arabia, seeking to drain a supply glut and support prices, plans to cut its crude oil exports next month to below 7 million barrels per day (bpd), while keeping its output well below 10 million bpd, a Saudi official said on Monday.
Brent crude futures rose 9 cents, or 0.1 per cent, to settle at $66.67 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 8 cents, or 0.1 per cent, to settle at $56.87 a barrel.
Since the beginning of the year, both benchmarks have risen around 25 percent.
Crude has been supported since the Organization of the Petroleum Exporting Countries and its allies, including Russia, returned to supply cuts as of Jan. 1. The group, known as OPEC+, agreed to reduce supply by 1.2 million bpd for six months.
Riyadh has voluntarily cut its supply by more than the deal requires and in April will keep output “well below” 10 million bpd, the Saudi official said - less than the 10.311 million bpd that the kingdom had agreed to pump.