While you were sleeping: Stocks rise on US data

While you were sleeping: Stocks rise on US data

November 25 (BusinessDesk) - Equities on Wall Street and in Europe advanced on signs the U.S. economic recovery was gathering steam, convincing investors that U.S.-dollar-denominated assets were the place to be.

In early afternoon trading, the Dow Jones industrial average gained 1.22%, the Standard & Poor's 500 Index rose 1.31% and the Nasdaq Composite Index climbed 1.85%.

While the U.S. housing market is still a cause for concern, most of the latest data underpin the view that the world’s largest economy is on the mend.

New claims for unemployment benefits last week dropped to their lowest level in more than two years, while consumer spending rose for a fourth straight month in October, American government reports showed.

U.S. consumer sentiment rose to its highest level since June, according to a private survey.

"If you look at the longer-term economic trends, consumer spending is continuing to improve. Even the unemployment situation, which everyone knows is very bad, is slowly, but surely improving," Bryant Evans, investment advisor and portfolio manager at Cozad Asset Management, in Champaign, Illinois, told Reuters.

Financial markets around the world took a tumble yesterday after North Korea rained artillery shells on a South Korean island, causing civilian deaths. Today a U.S. aircraft carrier group set off for Korean waters.

"Now you are getting good economic data, and you have a tug of war going on here between an improving economy and geopolitical events," Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont, told Reuters.

In Europe, the Stoxx 600 gained 1% to 266.37.

Ireland’s government today said it would cut spending by about a fifth and raise taxes over the next four years in an effort to narrow the budget deficit to 3% of gross domestic product by the end of 2014, from 12% this year.

The country is finalising talks with the European Union and the International Monetary Fund on an 85 billion-euro bailout for its battered banks. There were unconfirmed reports the Irish government would assume control of the Bank of Ireland, the last of the nation’s major banks that haven’t ceded their independence.

Investors drew some optimism from data showing that German business sentiment rose in November to its strongest level since 1991. Even so, caution still rules in Europe.

"It's possible that we will continue to have volatility without too much movement into the end of the year. The next year will be challenging as the euro zone debt problems are still there," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, told Reuters.

The euro gained 0.1% to US$1.3384. It dropped almost 2% on Tuesday.

The Dollar Index, which measures the greenback against a basket of six major currencies, slipped 0.1% to 79.60.

Gold weakened too, with investors forecasting the precious metal to remain relatively stead in the coming weeks.

Spot gold fell 0.2% to US$1,373.95 an ounce by 1552 GMT.

U.S. gold futures fell US$3.40 to US$1,374.20.

"I do think, however you look at it, it's going to have rest and a consolidation for a while, and as we speak, it trades [near] an all-time high in non-dollar terms," Charles Morris a fund manager at HSBC Global Asset Management, told Reuters.

Oil rose on the positive U.S. economic data, even as weekly U.S. inventory data from the Energy Information Administration showed an unexpected rise in crude stocks last week as imports rose.

U.S. crude climbed US$2.05 to US$83.30 a barrel by 1644 GMT.

(BusinessDesk)

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