By Christopher Whittall
Global stocks moved higher Tuesday as a recent rise in commodity prices continued to sustain the postelection rally.
The Dow Jones Industrial Average rose 47 points, or 0.3%, in early trading to reach 19004, passing 19000 for the first time. The S&P 500 was up 0.2% and the Nasdaq Composite up 0.3%. The S&P 500, Dow, Nasdaq and Russell 2000 indexes all climbed to record highs Monday. The Stoxx Europe 600 was up 0.4% recently, led higher by commodity-related shares.
Oil prices were down during volatile trading Tuesday, but remained at around three-week highs as investors continued to bet the Organization of the Petroleum Exporting Countries will reach a deal to cutproduction at the end of the month. Brent crude prices were down 0.3% recently at $48.77 a barrel, after rising to just shy of $50 a barrel in earlier trade.
"You've seen at the beginning of the year that oil can have a very profound effect on equity markets," said Jeroen Blokland, a senior portfolio manager at Dutch asset manager Robeco, referring to the fall in share prices when Brent crude sank to a low of around $28 a barrel in January.
"Rising commodity prices do help. But I think there is also a bit of an upbeat mood about the [Donald] Trump election," he added.
The recent gains in commodities prices have provided the latest leg to a rally that has lifted stock markets in the U.S., Europe and Japan since the election of Mr. Trump earlier this month.
Base metals prices also continued to advance Tuesday amid hopes of a pickup in demand from the U.S. and China, with copper futures in London up 0.9% at $5,610 a ton.Mining companies were among the best performers in Europe, with Anglo American PLC shares up around 5%, Rio Tinto PLC rising 2.7% and BHP Billiton PLC up around 4%. The oil and gas subindex of the Stoxx Europe 600 climbed 0.6%.
Investors have already been snapping up shares of banks, health-care and industrials companies on the expectation the U.S. president-elect would loosen regulation and boost infrastructure spending.
At the same time, money managers have stepped back from Treasurys and sent the dollar higher since Mr. Trump's election in the belief that his policies would lead to higher inflation and cause the Federal Reserve to raise interest rates at a faster pace than previously thought. The strong dollar, in turn, has weakened the yen and the euro, boosting the competitiveness of Japanese and European exporters.
The dollar was little changed Tuesday as investors continued to take stock following the buck's sharp postelection rally. The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, was up 0.1% recently, after a 0.5% decline Monday broke a 10-trading day winning streak.
Government bonds rose slightly Tuesday as yields fell. The yield on the 10-year Treasury note was 2.293% recently, down from 2.335% at Monday's close. That compares with a close of 1.867% on election day.
"I do think the rise in yields we've seen is relatively sustainable. You have a Federal Reserve rate hike coming" in December, said David Stubbs, global market strategist at J.P. Morgan Asset Management.
On the potential for an OPEC production-cut agreement, Mr. Stubbs said he would "believe it when I see it," but added dramatically higher oil prices aren't needed for equity markets to move higher.
"That's one part of the picture, [but] that is not the main consideration for investors. Growth seems resilient. Some of the risks arebehind us in terms of the slowdown in corporate profits. There are reasons to stay invested," he said.
In Asia, shares gained across the board as local investors shrugged off comments from Mr. Trump that he would order a withdrawal from the proposed Trans-Pacific Partnership trade deal.
The Nikkei Stock Average recovered, after falling in response to a 6.9-magnitude earthquake that struck off the eastern coast of Japan early Tuesday, to close up 0.3%. Australia's energy-heavy S&P ASX/200 rose 1.2%, while Hong Kong's Hang Seng Index was up 1.4%.
In other commodities, gold prices were up 0.4% at $1215 an ounce.
Ese Erheriene contributed to this article.
Write to Christopher Whittall at email@example.com
(END) Dow Jones Newswires
November 22, 2016 09:50 ET (14:50 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.