Wednesday, June 10, 2015
U.S. and European shares rebounded after several down days on Wednesday, with Wall Street surging on a report that Germany may be satisfied with Greece committing to at least one economic reform in return for aid.
The German government may settle for a clear commitment by Greece to a measure upfront to unlock aid, Bloomberg reported, citing two people familiar with Germany’s position.
“The report definitely added to the bullish sentiment of the market and stocks jumped on it. No question about it,” said Adam Sarhan,
chief executive of Sarhan Capital.
The Dow Jones industrial average .DJI rose 256.61 points, or 1.44 percent, to 18,020.65, the S&P 500 .SPX gained 25.35 points, or 1.22 percent, to 2,105.5 and the NasdaqComposite .IXIC added 64.29 points, or 1.28 percent, to 5,078.16.
German bond yields hit 1 percent for the first time since September as long-term inflation expectations rose, also helping lure investors back into equities despite lingering jitters over recent market swings. European shares snapped a six-day losing streak.
The pan-European FTSEurofirst 300 .FTEU3 share index closed up 1.7 percent compared with a 1.35 percent rise for the MSCI all world stock index .MIWD00000PUS. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS finished up 0.3 percent.
The dollar slipped to two-week lows against the yen on Wednesday after Japan’s chief central banker said the yen was “very weak” and unlikely to fall further, prompting investors to trim huge bets against the Japanese currency.
By late morning, the dollar .DXY was down 0.46 percent against a basket of major currencies while the euro was up 0.12 percent against the dollar.
Wild fluctuations in bond markets have sapped investor confidence in recent weeks as investors revise inflation and interest rate expectations.
A selloff of German Bunds and this week’s hefty corporate and government debt supply propelled longer-dated U.S. Treasuries yields to their highest in more than seven months on Wednesday.
“We are completely tracking Bund yields,” said Mike Cullinane, head of Treasuries trading at D.A. Davidson in St. Petersburg, Florida.
Markets increasingly expect the U.S. Federal Reserve to hike interest rates before the year is out, while the European Central Bank’s stimulus program to revive the euro zoneeconomy is seen pushing inflation slowly toward its near 2 percent target.
The U.S. dollar index .DXY hit a three-week low, with analysts pointing to debate around the G7 summit regarding the speed of the dollar’s rise as the U.S. prepares to end years of ultra-loose monetary policy.
Traders said investors had cut back their positions amid the volatility and said the sell-off in bonds was likely to go on.
Oil prices rose on Wednesday after U.S. government data confirmed a big weekly drawdown in crude inventories and on signs that U.S. oil production growth was leveling off after several years of sharp increases.
U.S. crude was up almost 1 percent at $60.72 while Brent rose 0.5 percent to $65.21.