Major indexes set records as energy companies surge

Italian banking stocks staged something of a recovery, but miners came under renewed selling pressure after a sharp decline in commodities prices. The Standard & Poor’s 500 index edged up 3 points, or 0.2 percent, to 2,207 and also set a record of 2,214 shortly after the start of trading.

Confidence in the Canadian Dollar (CAD), on the other hand, soared in response to speculation that the Organisation of the Petroleum Exporting Countries (OPEC) could be on the verge of agreeing an oil production cut. Brent crude, the worldwide standard, rose $1.03, or 2.2 percent, to $49.29 a barrel in London.

However, Brent crude prices rebounded in the afternoon session after Iraq oil minister Jabar Ali al-Luaibi said he was “optimistic” that a deal could be reached to support prices.

The dollar hit its highest level against a basket of major currencies for nearly 14 years last week, after a boost from Donald Trump’s election victory that drove debt yields higher on expectations of more fiscal spending, price growth and a faster pace of monetary tightening. London Metal Exchange copper futures were down 1.6% at $5,783 a ton, while iron-ore prices also softened.

Wall Street suffered its worst performance in almost a month, while European stocks also softened, led by a slump in Italian banks as political risk resurfaced in Europe ahead of a referendum in Italy this weekend. Investors had grown jittery that a “no” vote could lead to a period of political instability and push back plans to raise capital for troubled lenders. Iran, which is considered crucial to a breakthrough because its output has been rising after Western sanctions were lifted, said it was also “optimistic”.

“Fears are that an Italian dissent and resulting market turmoil would dissuade already gutsy investors from daring to participate in desperately needed recapitalisations within a very troubled 4 trillion euro banking system”, said Mike van Dulken, Head of Research at Accendo Markets.

It has meant an electrifying run for the dollar, which was up at 1.0645 per euro and 113.04 yen as United States trading began and as it headed for its strongest month against the Japanese currency in seven years.

“For now, markets are running on hope and promise”, said Graham McDevitt, portfolio manager at Macquarie Investment Management. The dollar strengthened to 113.06 yen from 111.89 yen. The FTSE 100 index of leading British shares slipped 0.6%. TheStreet’s Valerie Young has details from Wall Street.

The index has under-performed European peers this month, as it contains many defensive stocks that have lagged as investors have bet on a return of inflation and growth following the election of Donald Trump as US president.

In UK stocks, Countryside Properties raced ahead after it said the market recovered from an initial bout of post-Brexit vote uncertainty and reported a sharp rise in profits.