Major world stock indexes rose on Wednesday, with the S&P 500 supported by sharply higher U.S. bank shares after strong earnings, while the pound was up after British Prime Minister Theresa May’s government won a confidence vote in parliament.
That should allow her to attempt to create a consensus among lawmakers on an agreement on Britain’s departure from the European Union. The confidence vote followed the parliamentary defeat of May’s Brexit deal late Tuesday.
Expectations of a softer Brexit - perhaps incorporating the Labour Party’s idea of membership of a permanent customs union - gave some support to the pound.
Sterling was last trading at $1.2873, up 0.12 per cent on the day.
Stocks mostly shrugged off the results of the vote. MSCI’s gauge of stocks across the globe gained 0.39 per cent.
Canada’s main stock index rose on Wednesday, helped by gains in bank shares on a day which saw strong quarterly earnings from big U.S. lenders.
The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed up 64.98 points, or 0.43 per cent, at 15,111.26
The main index rose for its ninth straight session.
Six of the index’s 11 major sectors were higher, led by a 1.1-per-cent gain in the financials sector.
Toronto-Dominion Bank was up 1.9 per cent, while Bank of Montreal rose 1.4 per cent.
The optimism spilled over from Wall Street, which rose after strong earnings reports from Goldman Sachs and Bank of America.
The materials sector, which includes precious and base metals miners, added 0.6 per cent, as nickel touched a 10-week high and gold prices were steady.
Energy stocks fell 0.7 per cent. Cenovus Energy Inc. dipped 1.9 per cent, while Canadian Natural Resources Ltd. and Suncor Energy Inc. lost 1.6 per cent and 1.4 per cent, respectively.
On Wall Street, strong earnings from Bank of America and Goldman Sachs helped to keep stocks in positive territory. Bank of America shares were up 7.2 per cent while Goldman’s stock was up 9.6 per cent.
“There is hope for this earnings season, and Goldman Sachs and Bank of America have got it started off on the right foot,” said Jake Dollarhide, chief executive officer at Longbow Asset Management in Tulsa, Oklahoma.
Wall Street’s major indexes hit one-month highs on Wednesday as upbeat earnings from Bank of America Corp and Goldman Sachs Group Inc boosted investor sentiment.
The Dow Jones Industrial Average rose 137.64 points, or 0.57 per cent, to 24,203.23, the S&P 500 gained 5.55 points, or 0.21 per cent, to 2,615.85 and the Nasdaq Composite added 10.86 points, or 0.15 per cent, to 7,034.69.
The pan-European STOXX 600 index rose 0.54 per cent.
The dollar rose against the euro as the euro zone single currency was pushed lower by worries about the zone’s economy, with the euro down 0.12 per cent to $1.14.
Earlier this week, data showed Germany barely escaped a recession in the second half of 2018 and European Central Bank chief Mario Draghi warned on Tuesday the euro zone economy was weaker than anticipated.
In sovereign debt markets, British government bonds underperformed versus German peers in early trade.
U.S. Treasury yields rose as stronger-than-forecast results from two major banks lifted Wall Street, reducing safe-haven demand for U.S. government debt.
Benchmark 10-year notes last fell 7/32 in price to yield 2.7326 per cent, from 2.708 per cent late on Tuesday.
Oil prices edged higher on Wednesday, buoyed by a U.S. equity market rally and a supply cut agreement by OPEC+, but gains were limited by data showing growing U.S. refined product inventories and record crude production.
Brent crude futures rose 68 cents to settle at $61.32 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 20 cents to settle at $52.31 a barrel.
Boosting oil prices, Wall Street’s main indexes hit a one-month high. Crude futures sometimes track equity markets.
Futures drew support from a supply cut agreement from the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producer Russia. The group agreed in December to cut combined oil output by 1.2 million barrels per day from January.
Russia’s deputy energy minister said the country will reach its oil output target reduction in April.
“The market is consolidating. To see what our next driver is, we’re going to watch to see if the cuts are working, if the members that agreed to them are adhering to them,” said Gene McGillian, director of market research at Tradition Energy.
Reuters