Global stocks gain on ECB stimulus hopes, U.S. economic data

August 26, 2014

By Sam Forgione

NEW YORK (Reuters) – Worldwide stock indexes rose on Tuesday and European bond yields fell on expectations of more stimulus from the European Central Bank, while strong U.S. data on durable goods and consumer confidence underpinned U.S shares.

The benchmark S&P 500 held above the 2,000 mark, after first breaching that milestone on Monday, and hit a record high. The Dow also hit an intraday record.

Speculation grew that the European Central Bank is preparing a program of large-scale asset purchases to weaken the euro and try to jump-start growth in the struggling euro zone. Those expectations have bolstered European bond and stock markets since Friday, when ECB President Mario Draghi hinted at a policy shift in a speech in Jackson Hole, Wyoming.

“Draghi’s readiness to do more is providing the necessary boost for equity indexes,” said Ashraf Laidi, chief global strategist at City Index. “Buying on the dips does remain the path of least resistance in the absence of any destabilizing factor.”

MSCI’s all-country world index was last up 0.22 percent, at 431.64.

In Europe, the broad FTSEurofirst 300 index closed up 0.75 percent, at 1,376.83. The 10-year German bund yield was last at 0.943 percent, up from a session low of 0.932 percent but down from 0.955 percent late on Monday.

On Wall Street, investors took heart from the data on U.S. durable goods orders and consumer confidence. The Conference Board, an industry group, said U.S. consumer confidence rose in August to its highest level since October 2007, topping expectations.

The Commerce Department reported that U.S. durable goods orders jumped 22.6 percent in July, the biggest gain on record, though the number was skewed by strong international demand for aircraft. Excluding transportation, orders fell 0.8 percent.

The Dow Jones industrial average was last up 43.74 points, or 0.26 percent, at 17,120.61. The Standard & Poor’s 500 Index was up 3.44 points, or 0.17 percent, at 2,001.36. The Nasdaq Composite Index was up 16.26 points, or 0.36 percent, at 4,573.60.

The benchmark 10-year U.S. Treasury note was roughly unchanged in price to yield 2.39 percent.

“It’s tough for Treasuries to sell off here given what’s going on in Europe,” said Gennadiy Goldberg, interest rate strategist at TD Securities in New York.

The euro was last down 0.13 percent, at $1.3174. Despite slight gains earlier in the session, the currency remained at its lowest in nearly a year against the greenback.

Brent crude fell 15 cents to settle at $102.50 a barrel. U.S. crude rose 51 cents to settle at $93.86 per barrel.

(Additional reporting by Nigel Stephenson in London and Karen Brettell in New York; Editing by Dan Grebler and Leslie Adler)

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