Tuesday 21.15 GMT. A stronger-than-expected reading of German economic sentiment helped boost demand for global assets, pushing stocks on Wall Street to a fresh five-year high.
News that the Zew survey covering Europe’s biggest economy rose from 35 in January to 48.2 this month helped counteract some of the recent poor data from the continent. That supported many stock barometers as they pushed back towards cyclical highs.
The FTSE Eurofirst 300 closed 1.1 per cent higher. Every sub-sector gained ground apart from mobile telecoms, which was dragged down by Vodafone after the heavyweight was downgraded by a broker.
On Wall Street, the S&P 500 returned to the trading fold after Monday’s Presidents’ Day holiday and added 10 points to 1,530, shrugging off easing housebuilder confidence in February and feeding off more merger talk that left the index on at a fresh 5-year high by closing time. The tech-heavy Nasdaq also rose to close to its highest level since November 2000.
With the Asia-Pacific region up 0.2 per cent, this left the FTSE All-World index advancing 0.8 per cent to 236. The All-World has struggled to make headway since it closed at a four-and-a-half year high of 235.7 at the start of the month.
Many national equity gauges have registered a good start to 2013 as investors continued to enjoy central banks’ ultra-loose policies, improving economic data from the US and China, and receding fears about a eurozone fracture. Corporate earnings have generally been considered a supportive factor, too.
But a quick glance at the moves across asset classes on Tuesday highlighted how, apart from equities, there was an apparent lack of conviction in the session.
Brent crude briefly traded below $117 a barrel before closing flat for the day, while US-traded copper fell 2 per cent to $3.66 a pound. Gold prices fell $6 to $1,604 an ounce.
German Bunds experienced demand, with 10-year yields easing 1 basis point to 1.62 per cent, while Treasury yields rose 2bp to 2.02 per cent.
In currencies, the dollar index was fractionally softer as the euro got limited benefit from the Zew survey, rising 0.3 per cent to $1.3388, with traders wary of this weekend’s Italian election.
Even the yen had a fairly quiet time by its recent standards, although it halted its decline to firm by 0.4 per cent versus the dollar to Y93.56.
The Japanese stock market has been extremely tightly correlated to the yen’s fortunes over the past several months, as the government seeks to tackle deflation partly by weakening the yen to boost exports.
But comments from Japan’s finance minister Taro Aso, in which he played down chatter about Tokyo buying foreign bonds as part of a monetary expansion strategy, has helped firm the yen and thus hurt equities.
The Nikkei 225 slipped 0.3 per cent in a mixed regional market.
The market will be looking to Wednesday’s release of the Federal Reserve’s latest policy meeting minutes for a guide to the central bank’s thinking.
Those of a more bearish nature will have their eye on the difficulty the stock market has had of late in making significant headway and note that another Washington budget deadline – the $1.2tn sequester – is looming as a potential sentiment trap.
Additional reporting by Jamie Chisholm in London