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Markets

US stocks open higher as German DAX hits all-time high

  • The Dow Jones Industrial Average added 0.2 percent at the open, outpaced by the tech-heavy Nasdaq and the wider S&P 500.
25 May 2021

LONDON: US stocks opened higher Tuesday following a strong showing in Europe, lifted by in-demand tech shares and further positive news from Moderna on its coronavirus vaccine's effectiveness in teenagers.

The Dow Jones Industrial Average added 0.2 percent at the open, outpaced by the tech-heavy Nasdaq and the wider S&P 500.

Tech firms are "buoyed by the recent reprieve in the spike in interest rates... as ramped-up inflation worries seem to be cooling a bit," Charles Schwab analysts commented.

"Moreover, with vaccine rollouts charging on in the US and Europe, optimism of economic recovery appears to be supplying some bullish sustenance," they added.

Schwab pointed to Moderna's announcement earlier Tuesday that its mRNA shot against Covid-19 was "highly effective" at preventing the disease in teenagers, and that it would apply for authorisation for the age group from US and global regulators "in early June".

In foreign exchange markets, the euro single currency hit a five-month dollar high.

Bitcoin gave up some of its gains after another wild day, after a rally following a supportive tweet from tycoon Elon Musk that offset fresh Chinese warnings of a crackdown on cryptocurrencies.

Meanwhile oil prices gained slightly, as talks between Iran, the US and other world powers aimed at reviving their 2015 nuclear agreement remained mired in differences.

Investors had already been buoyed Monday after Federal Reserve officials insisted that an expected spike in prices over the next few months -- caused by issues including supply bottlenecks and consumers splurging cash -- would be temporary.

The gains helped chip away at recent losses in the tech sector, which has taken the brunt of selling on concerns that surging inflation will force central banks to hike interest rates sooner than expected.

Tech giants are more susceptible to higher rates owing to the potential effect on their future earnings and cash flow.

In Europe, Germany's DAX index touched a new all-time high of 15,568.60 points in the morning before easing back in the afternoon, while Paris added 0.1 percent and London flatlined.

Investors in Europe's top economy had been encouraged by "a combination of M&A (merger and acquisition) activity, upbeat business sentiment data and easing US inflation fears," said analyst Sophie Griffiths at trading firm OANDA.

Investors seized on an announcement from Germany's top property group Vonovia of a 19-billion-euro merger with rival Deutsche Wohnen to form a sector giant.

Sentiment was also boosted by surging German business confidence.

The Ifo institute's monthly barometer based on a survey of 9,000 companies climbed to 99.2 points in May, 2.6 points up from April and its highest value in two years.

Key figures around 1400 GMT -

New York - Dow: UP 0.3 percent at 34,509.48 points

London - FTSE 100: FLAT at 7,048.95

Paris - CAC 40: UP 0.1 percent at 6,415.94

Frankfurt - DAX 30: UP 0.6 percent at 15,530.33

EURO STOXX 50: UP 0.4 percent at 4,051.95

Tokyo - Nikkei 225: UP 0.7 percent at 28,553.98 (close)

Hong Kong - Hang Seng Index: UP 1.8 percent at 28,910.86 (close)

Shanghai - Composite: UP 2.4 percent at 3,581.34 (close)

Euro/dollar: UP at $1.2251 from $1.2216 at 2100 GMT on Monday

Pound/dollar: DOWN at $1.4134 from $1.4157

Euro/pound: UP at 86.68 pence from 86.29 pence

Dollar/yen: FLAT at 108.96 yen

Brent North Sea crude: UP 0.2 percent at $68.57 per barrel

West Texas Intermediate: UP 0.5 percent at $66.35 per barrel

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