Stocks around the globe rose on Tuesday to six-month highs as positive economic data in China and Germany boosted investor sentiment, though concerns about the impact of U.S. policy on the healthcare sector capped gains on Wall Street.
Wall Street’s S&P 500 edged higher after upbeat quarterly reports from Johnson & Johnson and BlackRock Inc, with financials leading gains. Healthcare stocks, however, turned lower as shares of insurers fell after UnitedHealth Group Inc discussed concerns about U.S. Senator Bernie Sanders’ “Medicare for All” plan, as well as the White House’s proposal to end discounts from drugmakers.
“The money seems to be rotating out of healthcare into financials,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. “Thus far, I’d say earnings are somewhat as expected. The key thing out of the earnings season is going to be the second-half (of 2019) outlook.”
Even though Wall Street stocks were treading water, an advance in Chinese and European shares helped push the MSCI world equity index to a six-month high. Positive data, including a quicker pace of growth in Chinese home prices and improving sentiment among German investors, bolstered global equities.
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 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.
“After the strong rally we have seen in equities, people are now waiting for the next catalyst,” said Natixis Cross Asset Strategist Florent Pochon.
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.
Canada’s main stock edged lower on Tuesday, weighed down by a fall in material stocks.
The Toronto Stock Exchange’s S&P/TSX Composite index fell 13.26 points, or 0.08 per cent, at 16,502.20.
The health care sector gained 1.1 per cent as marijuana producers rallied. Aurora Cannabis Inc. was up 4 per cent, while Canopy Growth Corp. increased 2.1 per cent.
The materials sector, which includes precious and base metals miners, lost 1.4 per cent as gold prices fell to three-month lows.
The energy sector rose 0.3 per cent, while utilities and industrials declined 0.4 per cent and 0.2 per cent, respectively.
The Canadian dollar edged higher against its U.S. counterpart on Tuesday, rebounding from an earlier 11-day low as higher oil prices offset weaker-than-expected domestic manufacturing data.
The Canadian dollar was trading 0.1 per cent higher at 1.3352 to the greenback, or 74.90 U.S. cents. The currency touched its weakest intraday since April 5 at 1.3403.
Canadian factory sales were down by 0.2 per cent in February from January on lower sales of motor vehicles, as well as wood products, Statistics Canada said. Analysts had forecast no change.
Based on the latest available data, the Dow Jones Industrial Average rose 67.89 points, or 0.26 per cent, to 26,452.66, the S&P 500 gained 1.48 points, or 0.05 per cent, to 2,907.06 and the Nasdaq Composite added 24.21 points, or 0.3 per cent, to 8,000.23.MSCI’s gauge of stocks across the globe gained 0.18 per cent.
The pan-European STOXX 600 index ended 0.3 per cent higher.
As stocks advanced, U.S. Treasury yields rose to four-week highs. Benchmark 10-year notes last fell 11/32 in price to yield 2.5904 per cent, from 2.553 per cent late on Monday.
Even during this year’s rally in stocks, “the flight-to-quality bid in Treasury had not subsided,” JonesTrading’s O’Rourke said. “Now we’re starting to see the beginning of that, and that’s pushing yields higher.”
Spot gold prices dropped to their lowest level this year and were last down 0.9 per cent as risk appetite dented demand for the precious metal’s safe-haven credentials.
In currency markets, sterling slipped 0.3 per cent 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 Reuters reported that some European Central Bank policymakers doubt whether growth will rebound in the euro zone as projected. The currency was last down 0.2 per cent at $1.13.
The dollar index ticked up 0.1 per cent.
Oil steadied as expectations of tightening global supply, raised by fighting in Libya and declining Venezuelan and Iranian exports, were offset by uncertainty about the commitment to an OPEC-led production cut.
Brent crude futures rose 31 cents to $71.49 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 40 cents to $63.80 a barrel.