NEW YORK: Wall Street stocks streaked to fresh records Wednesday, with petroleum-linked shares rallying as oil prices closed at their highest level since December 2014.
All three major US indices jumped to new records. In Europe, bourses also rose but gains were tempered as new investment regulations rolled out across the region.
US sentiment got a lift from a strong report by the Institute for Supply Management’s purchasing managers, which rated manufacturing activity at its second highest level in seven years.
“The economy is in really good shape. It is hard to find a sector that is weak,” economist Joel Naroff said, adding that fourth-quarter US growth could come in at three percent or higher.
Investors remain broadly bullish on the US economy amid improving data and expectations that the just-enacted tax cut will boost corporate earnings.
Petroleum-linked shares rose sharply as oil prices rallied on the upheaval in Iran and persistently cold weather in the US. West Texas Intermediate, the US benchmark, climbed 2.1 percent to $61.63 per barrel,
Technology shares were another strong group, with Amazon, Facebook and Google-parent Alphabet all up more than one percent.
The broad-based S&P 500 finished up 0.6 percent at 2,713.06.
– Choppy performance in Europe –
Europe also rose despite the introduction of so-called MiFID II rules, which seek to tighten financial market regulation to stop rampant speculation.
The regulations, unveiled in 2011 at the height of the eurozone debt crisis and in the wake of the global economic meltdown, aim to curb speculative trading in commodities and to regulate high-frequency trading to protect investors.
In a new twist on Wednesday, British markets regulator the Financial Conduct Authority and German counterpart BaFin both granted the complex derivatives market another 30 months to comply with MiFID II reforms.
London trod 0.3 percent higher, while Paris and Frankfurt both added 0.8 percent.
“European equities are mostly higher in afternoon action, rebounding slightly from yesterday’s shaky start to the New Year,” said analysts at the Charles Schwab brokerage.
But markets “are choppy as the European Union’s new investment regulations, known as MiFID, are taking effect today”, they added.
– Dollar attempts recovery –
In foreign exchange activity on Wednesday, the dollar recovered somewhat against the euro following its recent poor form.
The European single currency had jumped Tuesday to a four-month high at $1.2081.
But the greenback pushed higher, adding to gains following Federal Reserve minutes that showed policy makers divided on how fast to lift interest rates.
“The latest minutes showed Fed officials still casting a wary eye on low inflation,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
“But the minutes of the Fed’s December meeting also acknowledged that looming tax cuts could be a boon for consumer and business spending, boost the economy and potentially pave the way to a quicker pace of rate increases.”
Source: Brecorder.com
