April 16, 2019 / 12:46 AM / 10 days ago

Global markets: Stocks approach new highs but healthcare stymies Wall Street

NEW YORK (Reuters) - Stocks around the globe rose on Tuesday to six-month highs as positive economic data in China and Germany boosted investor sentiment, though concerns about the impact of U.S. policy on the healthcare sector paused Wall Street’s rally.

Wall Street’s S&P 500 gave up nearly all of its earlier gains as healthcare shares fell after UnitedHealth Group Inc discussed concerns about U.S. Senator Bernie Sanders’ “Medicare for All” plan, as well as the White House’s proposal to end discounts from drugmakers.

“In healthcare, there is concern over various single-payer plans, which could damage the health insurance industry,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “That thesis slowly worked its way into the sector today, and aggressive selling begets more selling.”

Even though Wall Street stocks treaded water, an advance in Chinese and European shares helped push the MSCI world equity index to a six-month high. Positive data, including a quicker pace of growth in Chinese home prices and improving sentiment among German investors, bolstered global equities.

The latest leg higher in this year’s global rally comes as a degree of calm has descended across financial markets. European stock volatility reached its lowest level since January 2018, while on Wall Street, the CBOE Volatility Index hit its lowest level in more than six months.

The U.S.-China trade dispute, signs of slowing global corporate earnings and fears about an economic downturn have weighed on riskier assets in the past year. But investors have been quick to seize on positive news to keep the bull market running.

Among the information investors are anticipating is Chinese quarterly economic growth data, due on Wednesday. After a worrying start to the year, Chinese numbers have been more positive as authorities ramped up stimulus measures, soothing investor fears about a slowdown in the world’s second-biggest economy.

“The improvement in China data has been something of a lifeline,” said Kristina Hooper, chief global market strategist at Invesco in New York. “When the Chinese economy moves in one direction, usually the European economy follows with a lag.”

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 9, 2019. REUTERS/Brendan McDermid

The Dow Jones Industrial Average rose 67.89 points, or 0.26%, to 26,452.66, the S&P 500 gained 1.48 points, or 0.05%, to 2,907.06 and the Nasdaq Composite added 24.21 points, or 0.3%, to 8,000.23.

MSCI’s gauge of stocks across the globe gained 0.16%. The pan-European STOXX 600 index ended 0.3% higher.

As stocks advanced, U.S. Treasury yields rose to four-week highs. Benchmark 10-year notes last fell 11/32 in price to yield 2.5904%, from 2.553% late on Monday.

Even during this year’s rally in stocks, “the flight-to-quality bid in Treasuries had not subsided,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. “Now we’re starting to see the beginning of that, and that’s pushing yields higher.”

Spot gold prices dropped to their lowest level this year and were last down 0.9% as risk appetite dented demand for the precious metal’s safe-haven credentials.

In currency markets, the euro dipped after Reuters reported that some European Central Bank policymakers doubt whether growth will rebound in the euro zone as projected. The currency was last down 0.2% at $1.1282.

Sterling slipped 0.4% to $1.3049 after the Guardian newspaper reported that talks between Prime Minister Theresa May and the opposition Labour Party regarding Britain’s exit from the European Union had stalled. The Labour Party denied the report.

The dollar index ticked up 0.1%.

U.S. dollars and other world currencies lie in a charity receptacle at Pearson international airport in Toronto, Ontario, Canada June 13, 2018. REUTERS/Chris Helgren

Oil rose as fighting in Libya and declining Venezuelan and Iranian exports raised expectations of tightening global supply.

Brent crude futures rose 54 cents, or 0.76 percent, to settle at $71.72 a barrel. U.S. West Texas Intermediate crude futures gained 65 cents, or 1%, to settle at $64.05 a barrel.

Reporting by April Joyner; Additional reporting by Tommy Wilkes and Marc Jones in London, Amy Caren Daniel in Bengaluru and Gertrude Chavez-Dreyfuss, Karen Brettell and Stephanie Kelly in New York; Editing by Dan Grebler and Chris Reese

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