(Adds close of U.S. markets)
* MSCI world shares index gains 1.34%
* GameStop shares plunge, silver prices tumble
* Hopes for U.S. stimulus bolsters sentiment
By Herbert Lash
NEW YORK, Feb 2 (Reuters) - Global stock markets surged for
a second day on Tuesday, spurred by increased optimism about
more U.S. stimulus and the economic recovery, while retail
investors retreated from GameStop and fleeting interest in
silver, causing their prices to tumble.
The party for the Reddit-inspired trading frenzy that pushed
GameStop's stock GME.N up five-fold in five days last week
appeared over as its shares plunged 60% in heavy trade to close
at $90.00, less than one-fifth of an all-time peak on Friday.
Silver prices also fell on Tuesday, sliding 8.5% to $26.54,
after exchange operator CME Group Inc CME.O raised maintenance
margins on its COMEX 5000 Silver Futures contract by 17.9% to
their highest since October 2020. CME's move on silver took the air out of GameStop too, with
short interest declining to 53% of the stock's available shares
to trade, from 140%, said Tom Hayes, founder and chairman of
hedge fund Great Hill Capital LLC in New York.
"Everyone's rushing for the same narrow exit and trying to
get off margin, and you have a lot of weak sisters that are
coming out of the stock," Hayes said. "The squeeze is over."
Equities rallied as investors saw improved prospects for
President Joe Biden's proposed $1.9 trillion COVID-19 aid bill.
The U.S. Senate voted to open debate on a budget resolution,
starting a process that would allow Democrats to pass Biden's
package without Republican support. Expectations for Alphabet's Google and Amazon.com earnings
after the bell were high and lifting investor sentiment, Hayes
said. "Very few people want to be short going into that type of
earnings report," he said.
Google GOOGL.O closed up 1.38% and Amazon AMZN.O added
1.11%. The two stocks were among the top boosts to the S&P 500;
97% of technology companies have beaten analysts' earnings
estimates, IBES data from Refinitiv shows.
The Dow Jones Industrial Average .DJI rose 1.57%, the S&P
500 .SPX gained 1.39% and the Nasdaq Composite .IXIC added
1.56%. Advancing shares outnumbered declining ones by almost 3:1
on both the New York Stock Exchange and Nasdaq.
Positive momentum overnight in Asia carried through to
Europe, with the pan-European STOXX 600 .STOXX closing up
1.29%.
Medical device maker Coloplast COLOb.CO and Sweden's
Indutrade INDT.ST were the top gainers on STOXX 600 on beating
quarterly earnings. Initial European Union estimates showed the euro zone
economy contracted less than expected in the fourth quarter but
was headed for another, probably steeper decline, in the first
quarter of 2021. MSCI's world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was up 1.34% after posting its strongest
day in three months on Monday. Its emerging markets index
.MSCIEF rose 1.52%.
MSCI's gauge of Asia-Pacific stocks outside Japan
.MIAPJ0000PUS rose 1.4%. China's benchmark CSI300 Index
.CSI300 gained 1.5%, helped by easing concerns about tight
liquidity and declining cases of new coronavirus infections.
Japan's Nikkei 225 .N225 added 1%.
The dollar rose to two-month highs against the euro on a
perceived widening disparity between the strength of U.S. and
European economic recoveries from the coronavirus pandemic.
A sell-off in the euro after coronavirus lockdowns choked
consumer spending in Germany and short-covering in over-crowded
dollar-selling positions also strengthened the greenback.
The euro EUR= was last down 0.17% at $1.2038. The Japanese
yen JPY= weakened 0.08% at 105.02 per dollar.
The Australian dollar pared gains after the country's
central bank said it would extend its quantitative easing
program to buy an additional $100 billion of bonds. The Aussie
last stood at $0.7602 AUD=D4 , off the day's high of $0.7662.
Core euro zone government bond yields edged up, with the
benchmark German 10-year Bund yield DE10YT=RR. around two
basis points higher at -0.484%.
The 10-year U.S. Treasury US10YT=RR note yield rose about
0.2 basis points to 1.1014%.
U.S. gold futures GCv1 settled down 1.6% at $1,833.40 an
ounce.
Oil prices rose 2% or more to their highest in nearly 12
months after major producers showed they were reining in output
roughly in line with their commitments.
Brent crude futures LCOc1 rose $1.11 to settle at $57.46
a barrel. U.S. crude futures CLc1 settled up $1.21 at $54.76
a barrel.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
EURUSD and CESI https://tmsnrt.rs/3cFk5se
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