World equity markets advanced broadly on Wednesday after U.S. data again showed risk-friendly low inflation, which weakened the dollar, but shares of Boeing retreated after the United States said it would ground the company's 737 MAX aircraft. Shares in Europe rose on investor optimism that British lawmakers will rule out a "no-deal" Brexit.
U.S. producer prices barely edged higher in February, in the smallest annual increase since June 2017, the latest sign of benign inflation that supports the Federal Reserve's patient approach to future interest rate hikes. Other data showed new orders for key U.S.-made capital goods rose by the most in six months in January and shipments also rose, but business spending on equipment remained soft, leaving forecasts for weak first-quarter economic growth intact.
U.S. stocks advanced broadly. Boeing gained in early trade for the first time since Sunday's crash of a 737 MAX 8 jet in Ethiopia, but the shares later retreated after first Canada and then the United States said they were grounding 737 MAX jets, following steps already taken by Europe and other nations. Shares fell 3.0 per cent.
Economic data still suggests an "OK" economy but analysts' estimates of corporate profits are slowing, which is worrisome, said Michael Geraghty, equity strategist at Cornerstone Capital Group in New York. "Earnings estimate revisions continue to come downward, but that does not seem for the moment to be fazing equity investors," he said. "It's the old mantra: don't fight the Fed."
A Fed on hold for hiking rates suggests concern about economic growth, which can be seen in a narrowing gap in 10-year and two-year U.S. Treasury yields, Geraghty said. An inverted yield curve historically has been an indicator of recession. MSCI's gauge of stocks across the globe gained 0.57 per cent while the FTSEurofirst 300 index of leading European shares closed up 0.69 per cent.
On Wall Street, the Dow Jones Industrial Average rose 68.38 points, or 0.27 per cent, to 25,623.04. The S&P 500 gained 21.58 points, or 0.77 per cent, to 2,813.1, and the Nasdaq Composite added 64.68 points, or 0.85 per cent, to 7,655.71. The British pound rose ahead of another vote in Parliament on a proposal that would rule out a "no deal" exit from the European Union. Sterling rose 1.01 per cent to $1.3205 while the dollar softened against the yen and euro.
The dollar index fell 0.27 per cent, with the euro up 0.23 per cent to $1.1312. The Japanese yen strengthened 0.28 per cent versus the greenback at 111.08 per dollar. U.S. Treasury yields rose after falling the previous session as risk appetite improved and equity markets steadied.
Benchmark 10-year U.S. Treasury notes fell 2/32 in price to push yields up to 2.6141 per cent. "After yesterday's CPI data, yields fell. So some of these are just rebound after that," said Stan Shipley, fixed income strategist at Evercore ISI in New York.
Oil futures rallied more than 1 per cent as an unexpected drop in U.S. crude inventory and a forecast of slower-than-expected supply growth from the world's top crude producer boosted prices. U.S. crude stocks fell last week as refineries hiked output, the U.S. Energy Information Administration said.
U.S. crude rose $1.39 to settle at $58.26 per barrel and Brent settled up 88 cents at $67.55. Gold hit nearly a two-week high as tepid U.S. economic data reinforced views the Fed would be patient on monetary policy. U.S. gold futures settled 0.9 per cent higher at $1,309.3 per ounce.
(With inputs from agencies.)