U.S., European shares advance as euro dives to lowest since 2017

FILE PHOTO – A stock broker works at Frankfurt’s stock exchange as markets react on the coronavirus disease (COVID-19), at the stock exchange in Frankfurt, Germany, March 27, 2020. REUTERS/Kai Pfaffenbach

WASHINGTON/LONDON, April 27 (Reuters) – Wall Street rose in choppy trade on Wednesday on a boost from strong earnings reports from Microsoft and Visa, as commodity stocks kept European shares buoyant.

The euro dropped to its weakest since 2017 after Russia halted gas supplies to Bulgaria and Poland and investors worried more about the region’s economy.

The dollar continued its surge, on course for its biggest monthly gain since January 2015 as expectations mounted that the Federal Reserve will hike interest rates aggressively in coming months and the U.S. economy will be stronger than the euro zone.

The Dow Jones Industrial Average (.DJI) rose 321.93 points, or 0.97%, to 33,562.11, the S&P 500 (.SPX) gained 41.21 points, or 0.99%, to 4,216.41 and the Nasdaq Composite (.IXIC) added 100.18 points, or 0.8%, to 12,590.92 by 2:27 p.m. EST (1837 GMT).

Strong earnings reports on Wednesday boosted U.S. stocks, with Microsoft Corp (MSFT.O) jumping over 6% and Visa Inc (V.N) surging nearly 8%. They helped boost U.S. shares following Tuesday’s rout, which saw the Nasdaq close at its lowest since December 2020.

Some of Wall Street’s biggest names have reported results this week, with investors seeking a counterweight to the deluge of negative news that has pounded stocks. read more

Google-parent Alphabet Inc (GOOGL.O)fell over 3% as slowing YouTube ad sales pushed quarterly revenue below expectations. Boeing Co (BA.N)dropped 8.7% after it disclosed $1.5 billion in abnormal costs from halting 777x production.

European shares’ gains were limited as Russian energy giant Gazprom halted the gas supplies and German consumer morale sank.

The Euro STOXX 600 (.STOXX) was up 0.73%, as Germany’s DAX (.GDAXI) rose 0.27%. Britain’s FTSE 100 (.FTSE) climbed 0.53%.

European corporate earnings were mixed. Credit Suisse reported another quarterly loss and Deutsche Bank warned the Russia-Ukraine conflict could hurt annual earnings. read more

Russia cut the gas flow to Bulgaria and Poland for rejecting its demand to pay in roubles, taking direct aim at European economies. This led investors to sell euros and snap up U.S. dollars. read more

MSCI’s benchmark for global equity markets (.MIWD00000PUS) rose 0.49%. Emerging markets stocks (.MSCIEF) fell 0.43%.

U.S. Treasury yields slid as data suggested trade dented economic growth last quarter and investors worried about the “restrictive” policy the Fed will pursue next week to combat inflation.

The U.S. trade deficit in goods widened to a record in March, the Commerce Department said. Trade has subtracted from gross domestic product growth for six straight quarters, the longest such stretch since the beginning of 2016. read more

The euro dropped as low as $1.0512 , its weakest against the dollar since May 2017. Analysts cited the war in Ukraine and growing concerns that the bloc’s economy will fall into recession this year.

“The euro’s blatant inability to rally on hawkish comments by European Central Bank members means lingering vulnerability to an external environment negatively affected by an ever-concerning situation in Ukraine and generalized USD strength,” ING FX strategists wrote in a note to clients.

The dollar index measuring the greenback against a basket of rivals, hit a five-year high.

“The U.S. dollar benefits from the prospect of an ongoing flight to safety liquidity bid,” said Jeremy Stretch, head of G10 FX strategy at CIBC.

CHINESE REBOUND

There was more selling in Asia, with MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) down 0.82% after hitting its lowest since mid-March. Tokyo’s Nikkei (.N225) fell 1.17%.

Australian shares (.AXJO) lost 0.78% as inflation hit a 20-year high, bringing interest rate rises closer. read more

Battered Chinese stocks (.CSI300) bucked the trend, gaining almost 3% as data showed faster profit growth at industrial firms in March than a year earlier. read more

In the previous session, China stocks fell to their lowest in two years on fears that persistent COVID lockdowns would hurt economic activity and disrupt global supply chains. read more

Prices of key commodities were under pressure from the stronger U.S. dollar, which makes them more expensive to holders of other currencies.

Brent crude futures were last up 0.3% as U.S. West Texas Intermediate crude futures gained 0.19%. read more

Spot gold prices hit a more than two-month low and were last down 1%.

Additional reporting by Kanupriya Kapoor and Joice Alves; Editing by John Stonestreet, Mark Heinrich, David Gregorio and Nick Zieminski

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