US equities climbed as data showed better-than-expected demand for durable goods and modest pressure on inflation. The pound jumped before another Brexit vote and the dollar dipped.
The S&P 500 Index gained for a third day, with industrial stocks among the best performers. European shares also advanced, and the pound rallied before the next major Brexit vote. Crude oil rose to a four-month high in New York. Treasury yields ticked higher as data showed orders placed with US factories for business equipment rebounded in January by the most in six months as the producer price index rose less than forecast in February.
The US data signaled a positive start to the year for the world’s biggest economy and little pressure on the Federal Reserve to raise interest rates, just as investors were digesting disappointing numbers from Japan and Australia.
The ongoing Brexit drama, a cut to the UK’s growth forecast and a warning from America’s top trade negotiator that tariffs may not be rolled back are adding to the complex picture, with reports on Chinese production and retail sales and a Bank of Japan policy decision also coming up this week.
“The weak PPI undermines the few remaining arguments for a 2019 rate hike,” Christopher Low, the chief economist at FTN Financial, wrote in a note to clients. “Meanwhile, the durable goods report suggests continued growth.”
Sterling extended its gains for the week and gilts fell as UK lawmakers prepare to vote on whether to tear the country out of the European Union with no agreement, or give themselves the chance to delay Brexit in the hope of securing better terms.
Elsewhere, Asian stocks slumped. Australia’s dollar slid after weak consumer confidence data reinforced a deteriorating outlook for the economy. West Texas oil climbed above $57 a barrel after an industry report showed an unexpected drop in US fuel supplies. Emerging-market stocks declined for the first time in three days.