NEW YORK (REUTERS) - Wall Street led global stocks higher on Thursday (March 21) on the back of upbeat economic data, while the dollar rallied despite the Federal Reserve's uber-dovish stance as Brexit worries weighed on the euro and sterling.
The British currency tumbled 0.73 per cent against the US dollar on a rising probability of a "no-deal" Brexit that would likely slow economic growth.
A day after the Fed flagged an economic slowdown, US data showed jobless benefit applications fell more than expected while mid-Atlantic factory activity rebounded, triggering gains in technology stocks, and the Wall Street benchmark closed at its highest in over five months.
The Dow Jones Industrial Average rose 216.84 points, or 0.84 per cent, to 25,962.51, the S&P 500 gained 30.65 points, or 1.09 per cent, to 2,854.88 and the Nasdaq Composite added 109.99 points, or 1.42 per cent, to 7,838.96.
MSCI's gauge of stocks across the globe gained 0.68 per cent and emerging market stocks rose 0.11 per cent.
Brazil's stock benchmark fell sharply after former president Michel Temer, who left office three months ago, was arrested as part of the sweeping anti-corruption "Car Wash" probe.
The Bovespa fell 1.3 per cent while the Brazilian currency lost 0.64 per cent at 3.7995 per dollar.
TREASURY YIELD CURVE FLATTENS
Benchmark Treasury yields briefly touched their lowest since early 2018 and the yield spread between the three-month Treasury bill and the 10-year note shrank to its narrowest since August 2007. A narrow spread between the two yields indicates increased market expectations of a recession.
"The Fed has doubled down on its dovish tilt," said Matt Freund, head of fixed-income strategies at Calamos Investments."The global economy is clearly softening and the Fed is looking at liquidity conditions." Benchmark US 10-year notes last fell 1/32 in price to yield 2.5387 per cent, from 2.537 per cent late on Wednesday (March 20).
Three-month bills were yielding 2.4175 per cent.
The 30-year bond last rose 7/32 in price to yield 2.9651 per cent, from 2.975 per cent late on Wednesday.
The US dollar recouped the ground lost in the previous session after the dovish Fed's statement. Sterling continued to fall with the rising likelihood of a no-deal Brexit.
European Union leaders wrangled over what kind of delay to offer Britain as it looked less likely that Prime Minister Theresa May can convince parliament to ensure an orderly withdrawal.
The pound was recently trading at $1.31, down 0.69 per cent on the day.
The dollar index rose 0.63 per cent, with the euro down 0.35 per cent to US$1.1371.
"The focus shifted back to Brexit and the potential downside that a 'no deal' would create," said Minh Trang, senior currency trader at California's Silicon Valley Bank.
Norway's currency shot up after its central bank, going against the grain, raised interest rates and signaled a 50-50 chance another hike will follow by mid-year.
The Norwegian krone gained 0.56 per cent versus the US dollar at 8.46.
Oil prices fell after touching their highest in 2019.
US crude fell 0.7 per cent to US$59.81 per barrel and Brent was last at $67.64, down 1.26 per cent on the day.
Spot gold dropped 0.2 per cent to $1,309.27 an ounce. Copper lost 0.38 per cent to $6,432.50 a tonne.