Risk appetite returned to the financial markets on Tuesday, allowing US equity indices to close with strong gains. The Dow 30 index rose 213.12 points to 17,706.05 (+1.22%), the S&P 500 index climbed 28.02 points to 2,076.06 (+1.37%), and the Nasdaq closed 95.27 points up to 4,861.06 (+2.00%). The S&P 500 VIX, which is considered a gauge of market uncertainty, slid 1.40 points to 14.42 (-8.85%) to indicate that risk-on flows are in play.
In stock market news, HP Enterprise announced its plans to spin off and merge its IT services business with Computer Sciences Corp to help the company focus on cloud services business units. HP Enterprise is projected to have $33 billion in annual revenue after this spinoff. Meanwhile, Best Buy shares tumbled roughly 7% on Tuesday after the company downgraded its guidance for the current quarter.
European markets also chalk up gains despite data misses
Data from the euro zone came in weaker than expected yesterday, as the German ZEW economic sentiment index slipped from 11.2 to 6.4 while the region’s reading dropped from 21.5 to 16.8 instead of rising to the estimated 23.4 figure. Still, the German DAX logged in a gain of 215.02 to 10,057.31 (+2.18%), the French CAC 40 rose 106.42 points to 4,431.52 (+2.46%), and the Euro Stoxx 50 rose 80.91 points to 3,013.84 (+2.76%).
In the UK, the FTSE rose 82.83 points to 6,219.26 (+1.35%) even after BOE Governor Carney reiterated the negative repercussions of a potential Brexit during the BOE Inflation Report hearings. This follows the UK Treasury’s warnings about a potential year-long recession and a loss of more than 800K jobs should the UK decide to leave the EU. Opinion polls are still suggesting that the vote is too close to call, although some have indicated a narrow lead in favor of staying in the region.
Asian equities lifted by commodity rebound
Crude oil prices recovered to the $49/barrel levels recently, buoyed by the report from the American Petroleum Institute indicating a decline of 5.14 million barrels in inventories. So far, this is keeping Asian markets afloat even with mixed data from Australia and New Zealand.
The Land Down Under reported a sharper than expected 2.6% decline in construction work done for the first quarter of the year compared to the estimated 1.4% drop. Meanwhile, New Zealand showed a wider trade surplus of 292 million NZD compared to the 40 million NZD consensus as exports surged 4.0% during the month.
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