The US stocks recorded sizable gains on Tuesday as investor optimism was boosted by upbeat housing data, as well as news of a sales tax hike delay in Japan and better-than-expected ZEW survey data from Germany. The S&P 500 rose 10.48 points, or 0.5% to close at an all-time high of 2,051.80. The Dow Jones Industrial Average added 40 points, or 0.2%, to close at a record level of 17,687.82. US home builder sentiment rose in November as the Housing Market Index released on Tuesday indicated an advance to 58 in November from 54 in October, which was led by more optimism over present and upcoming sales of single-family homes. And US producer inflation edged up 0.2 percent in October, above expectations. Nevertheless, the underlying inflation trend is weak as core PPI excluding energy, food and services rose only 0.1 percent. Today at 20:00 CET Fed releases Minutes from October 28-29 FOMC Meeting which markets will watch for any clues on when the Fed will start raising rates.
European markets were buoyed by the better-than-expected German ZEW survey, showing the lead economic-sentiment indicator rose to 11.5 in November from a negative 3.6 in October. The survey eased concerns about Europe’s biggest economy by providing grounds for optimism after data released last week showed Germany narrowly avoided recession in the third quarter. The DAX equity index jumped 1.6% to 9,456.53, the strongest close since September 30. The UK’s FTSE 100 index rose 0.6% to 6,709.13, and in Paris, the CAC 40 gained 0.9% to end at 4,262.38. The euro rose against the dollar following the ZEW data, but will likely remain under pressure as the European Central Bank has indicated it is considering purchasing government bonds as the next stage of its monetary easing policy measures. The dollar fell against the pound after a report that inflation in the UK accelerated in October to 1.3%, from 1.2% in September. Yesterday afternoon Japanese Prime Minister Shinzo Abe called for snap elections in December and delayed a planned sales-tax hike delay for a year and a half. Japanese stocks started modestly higher today but quickly added to gains as the yen continued falling ahead of Bank of Japan’s Interest Rate Statement and the central bank’s Governor Haruhiko Kuroda’s press conference later in the day.
Oil continued falling amid speculation that OPEC will resist production cuts sought by some of its smaller members. Ecuador and Venezuela will ask members of the Organization of Petroleum Exporting Countries to reduce excess output, an Ecuador official said. Brent for January settlement fell 84 cents to $78.47 a barrel yesterday on the London-based ICE Futures Europe exchange.
Gold prices jumped Tuesday as the dollar fell against major currencies amid economic and political news. The US currency fell against the yen after Japanese Prime Minister Shinzo Abe said Tuesday the government will delay by 18 months a planned increase in sales tax. He will dissolve the lower house of parliament and has called for a snap election to be held in December. Gold has been falling against the backdrop of improving US economy and stronger dollar as central banks outside US expand monetary easing policy measures to stimulate faltering economies. Gold for December delivery gained $13.60, or 1.2%, to settle at $1,197.10 an ounce. December silver gained 12 cents, or 0.7%, settling at $16.17 an ounce.