• The Star Staff

Stocks advance toward record high on stimulus; gold crashes

A gauge of global equity markets rose on Tuesday as a Wall Street benchmark neared its record high, lifted by hopes for fresh U.S. stimulus and signs of a growing American economy that spurred yields to climb and thrashed gold prices.


Hopes of steady economic recovery from the COVID-19 pandemic boosted sentiment, helping European stocks hit a near three-week high as automakers gained on a surge in China sales numbers.


The S&P 500 .SPX neared its Feb. 19 peak, when investors started dumping shares in anticipation of what proved to be the biggest U.S. economic slump since the Great Depression.


The dollar resumed its weeks-long decline against a basket of peers and the euro topped $1.18 as investors flocked to currencies that benefit from an improving global market outlook, while gold prices dived as expectations of a U.S. stimulus deal boosted risk appetite.


Spot gold prices fell over 5%, on track for the largest one-day drop in over seven years and silver XAG= plunged over 12.5%, also the largest drop since 2013.


Spot gold XAU= last dropped 5.3% to $1,919.96 an ounce.


U.S. producer prices increased by the most in more than 1-1/2 years in July, and the Labor Department’s producer price index for final demand rose 0.6%, driven by a surge in portfolio management fees and rising costs for gasoline.


The market believes the economy will grow and that the pandemic will be overcome, said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.


“Short term, we’re going to get stimulus,” Ghriskey said. “Longer term is that we’re going to get through this virus. We’re going to have a vaccine eventually.”


MSCI’s benchmark for global equity markets .MIWD00000PUS rose 0.71% to 568.08, off just over 2% from its record, while Europe’s broad FTSEurofirst 300 index .FTEU3 closed up 1.64% at 1,436.83.


On Wall Street, the Dow Jones Industrial Average .DJI rose 0.93%, the S&P 500 .SPX gained 0.33% and the Nasdaq Composite .IXIC dropped 0.45%. The S&P was less than half a percentage point from a fresh record.


Russian President Vladimir Putin’s announcement that Russia had become the first country to grant regulatory approval to a COVID-19 vaccine after less than two months of human testing aided sentiment, some analysts said.

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