Wall Street stocks ended a roller-coaster ride higher on Tuesday, while the yen hit a fresh 20-year low against the dollar on anticipation of further US monetary tightening.
US stocks also started the day down after most leading European and Asian bourses fell after the World Bank issued a negative outlook and retail giant Target issued a profit warning.
The World Bank cut its global growth estimate to 2.9 percent, 1.2 percentage points below the January forecast, in the wake of the Russian invasion of Ukraine that sent grain and oil prices soaring.
Meanwhile, Target said it was canceling orders and making significant price reductions due to excess inventory, some of which was delayed due to supply chain issues.
But while Target fell 2.3 percent, the broader market rallied as investors took the negative statement consistent with recent gains from retailers, which highlighted higher costs.
“I felt it was a little unfair to penalize markets twice for Target,” said Jack Ablin, chief investment officer at Cresset Capital.
“There’s certainly a lot of uncertainty surrounding the data. We’re waiting for inflation later this week,” Ablin said. “In the meantime, we’re going to see a lot of turbulence.”
All three major U.S. indices closed solidly higher, with the broad-based S&P 500 up one percent.
Earlier in Asia, the Sydney stock market was down more than a percent after Australia’s central bank announced a larger-than-expected rate hike to quell inflation.
Leading central banks, including the US Federal Reserve, have hiked interest rates in response to price pressures.
At a closely watched meeting on Thursday, the European Central Bank is expected to end its stimulus program as a prelude to rate hikes.
But the Bank of Japan has calmed down the wave of hikes, putting pressure on its currency – the yen hit a new 20-year low against the dollar and a seven-year low against the euro.
“The BoJ stands out from its global peers by not tightening monetary policy, leading to a widening of interest rate differentials while other central banks continue to rise,” noted Deutsche Bank analyst Jim Reid.
– Key Figures at 2040 GMT –
New York – Dow: up 0.8 percent to 33,180.14 (close)
New York – S&P 500: up 1.0 percent at 4,160.68 (close)
New York – Nasdaq: up 0.9 percent at 12,175.23 (close)
London – FTSE 100: down 0.1 percent at 7,598.93 (close)
Frankfurt – DAX: down 0.7 percent at 14,556.62 (closing price)
Paris – CAC 40: down 0.7 percent at 6,500.35 (close)
EURO STOXX 50: DOWN 0.8 percent at 3,806.74 (close)
Tokyo – Nikkei 225: up 0.1 percent at 27,943.95 (close)
Hong Kong – Hang Seng Index: down 0.6 percent at 21,531.67 (close)
Shanghai – Composite: up 0.2 percent at 3,241.76 (close)
Dollar/yen: UP at 132.62 yen from 131.88 yen late Monday
Euro/dollar: rise to $1.0715 from $1.0696
Pound/dollar: rise to $1.2592 from $1.2532
Euro/Pound: DOWN at 85.02p from 85.35p
North Sea Brent Crude: up 0.9 percent to $120.57 a barrel
West Texas Intermediate: up 0.8 percent to $119.41 a barrel
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