Global markets’ new records boosted by earnings & EU news

Published at Apr 26, 2017, in Equities

While geopolitical issues are still impacting overseas markets, it is in a positive way as the face-off between North Korea and the US seems a distant past.

Substantial gains in European markets have occurred over the last two days driven by indications that pre-polling is on the mark with the likelihood of centrist Emmanuel Macron having won the first round of voting in the presidential lead up, which now sees him installed as favourite to win the run-off election against far right candidate Marine Le Pen.

This news sparked a circa 200 points/4% rally in the Paris CAC 40 which was topped off with a slight gain last night as it closed at 5277 points, representing a nine year high.

Other European indices rallied on the back of this news with the FTSE 100 gaining 2.1% and the DAX rallying 3.4%. The latter posted another 0.1% gain last night to close at 12,467 points, a record high.

More records were to be broken overnight as the NASDAQ eclipsed the 6000 point mark, hitting a high of 6036 points before closing at 6025 points.

The Dow also built on Monday’s surge of 216 points, posting another 230 point gain on Tuesday, led higher by Caterpillar Inc, McDonald’s Corp, DuPont and Goldman Sachs Group. These were largely related to strong quarterly earnings performances.

The index closed at 20,996 points, representing a gain of 1.1%, leaving it also within striking range of hitting a record high.

On the commodities front, iron ore delivered two consecutive declines, bringing it back to US$66 per tonne.

After falling from circa US$53 per barrel a week ago, the oil price appears to have found a level of support in the vicinity of US$49 per barrel.

Given the euphoric market conditions and apparent dismissal of political tensions, particularly between the US and North Korea, the gold price has held up remarkably well. While last night’s closing price of US$1265 per barrel represents a two-week low, it is still well above the circa US$1200 per ounce level that it bounced from in mid-March as safe haven investors flocked to the precious metal.

Gains have only been moderate amongst base metals, with copper increasing approximately 1% over the last two days to US$2.56 per pound.

Nickel posted a slight gain overnight to close at US$4.20 per pound.

Zinc and lead were relatively flat, closing at US$1.17 per pound and US$0.98 per pound respectively.

The Australian dollar is fetching US$0.75.

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