World stocks rally on upbeat Wall St earnings; oil, govt bond yields up


  • Dollar near three-year high vs yen
  • US stocks rise again after Goldman reports solid Q3 profits
  • FTSE 100 recovers all ground lost in pandemic
  • Oil prices back near multi-year highs
  • Bitcoin tops $60,000

NEW YORK, Oct 15 (Reuters) – Stocks rallied globally on Friday after a run of strong U.S. corporate earnings reports fuelled optimism about the economy, though three-year-high oil prices kept inflation risks alive and supported government bond yields.

U.S. investment bank Goldman Sachs Group Inc (GS.N) was the latest on Wall Street to trounce market expectations when it reported a 66% surge in third-quarter profit, thanks to a record wave of investment banking activity. read more

Though some analysts warned investors against complacency so early in the earnings season, U.S. stocks joined Friday’s rally in global equities nonetheless.

The Dow Jones Industrial Average (.DJI) rose 0.81%, the S&P 500 (.SPX) gained 0.63% and the Nasdaq Composite (.IXIC) added 0.41%.

The pan-European STOXX 600 index (.STOXX) rose 0.74% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) climbed 0.78%.

“We are clearly off to a good start of the third-quarter earnings season, but have miles to go before we sleep,” said Arthur Hogan, chief market strategist at National Securities Corp. He noted that only 35 of the S&P 500 companies have reported their earnings.

Unperturbed by news of a fatal stabbing of a British lawmaker on Friday, Britain’s FTSE 100 (.FSTE) climbed 0.37% to hit a near 20-month high. The UK blue-chip index has now recovered all ground lost since the coronavirus pandemic began in March last year. read more

Soaring oil prices, which have fed investor concerns about their impact on businesses, also appeared to take a backseat.

Forecasts of a supply deficit over the next few months as demand rises on the back of relaxed travel restrictions drove oil prices to a three-year high of above $85 a barrel.

U.S. crude recently rose 0.79% to $81.95 per barrel and Brent was at $84.52, up 0.62%, after hitting a high of $85.10.

Bets that rising prices are likely to prompt central banks to raise interest rates sooner than expected lifted government bond yields, though gains were more pronounced in the United States than in Europe.

The yield on two-year U.S. Treasuries , which reflect short-term rate expectations, climbed to 0.3788%, from Thursday’s 0.354%.

In Europe, 10-year Bund yields slipped after notching seven straight weeks of gains on signs of rising inflationary pressure and robust economic growth.

The dollar, which has been bolstered by bets that the accelerating inflation could prompt the Federal Reserve to raise interest rates sooner than expected, touched a three-year high against the yen . One dollar bought 114.46 yen, the most since late 2018.

The dollar index , which measures the greenback against a basket of other currencies, was marginally lower on the day, slipping 0.04%, and set for its first weekly decline versus major peers since the start of last month, having lost a little ground to sterling and the euro .

Gold prices took a breather on Friday after having their best day in seven months the previous day. Spot gold dropped 1.5% to $1,768.32 an ounce. U.S. gold futures fell 1.37% to $1,772.00 an ounce.

The return of optimism will be tested by next week’s anticipated weaker growth data from China, and the impact of strengthening oil prices on consumers going into the winter months, said Mike Hewson, chief markets analyst at CMC Markets.

European car registrations slumped by more than a quarter in September, and Toyota Motor Corp (7203.T) said it would cut global output in November as chip shortages and supply chain problems continued to dog the sector.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gained 1.35%, rising 2.1% for the week in its best weekly performance since late June, while Japan’s Nikkei surged 1.81%, led by tech stocks.

Analysts largely attributed the gains in Asia to the U.S. rally.

Chinese shares rose more cautiously than elsewhere with blue chips (.CSI300) up 0.38% ahead of next week’s growth figures.

A Chinese central bank official said on Friday that the spillover effect of China Evergrande Group’s debt problems on the banking system is controllable, in rare official remarks on the liquidity crisis at China’s No. 2 developer that has roiled markets. read more

Bitcoin hit a six-month high of $60,000 on Friday, approaching the record hit in April, as traders became increasingly confident U.S. regulators would approve the launch of an exchange-traded fund based on its futures contracts. read more

Bitcoin on the rise
Bitcoin on the rise

Reporting by Huw Jones, additional reporting by Alun John; Editing by Kirsten Donovan, Steve Orlofsky and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.


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