Stocks climb with Treasury yields, Sterling climbs
(Updates after U.S. market open)
By Sinéad Carew and Huw Jones
NEW YORK/LONDON, July 7 (Reuters) - U.S. equities were rising with Treasury yields on Thursday as investors looked beyond upcoming rate hikes while oil prices rose with a focus on supply concerns outweighing recession fears.
In foreign exchange markets, the euro edged toward parity with the safe-haven dollar, which was flat against a basket of major currencies.
Sterling GBP=D3 was rising after the resignation of Britain's Prime Minister Boris Johnson under pressure from his political party following a string of resignations and scandals. On Wednesday, the pound had hit its lowest level since March 2020 as Johnson was insisting he would stay.
The technology heavy Nasdaq was leading gains with outperformance in chip stocks. And with U.S. Treasury yields rising, Wall Street investors were also starting to look ahead to the point where the Federal Reserve would be able to pause its interest rate hiking cycle.
"The primary thing right now is the direction of Treasury yields. It's giving folks a reason to believe the Fed is close to its end point in raising interest rates. That's giving the market some confidence to step in and buy growth stocks that had been beaten down," said Robert Pavlik, senior portfolio manager at Dakota Wealth, also citing recent declines in commodity prices.
Minutes from the Fed's June meeting published on Wednesday showed that at the time policymakers discussed how a more restrictive stance might be needed if elevated inflation persisted.
The Dow Jones Industrial Average .DJI rose 233.34 points, or 0.75%, to 31,271.02, the S&P 500 .SPX gained 42.33 points, or 1.10%, to 3,887.41 and the Nasdaq Composite .IXIC added 186.83 points, or 1.64%, to 11,548.68.
Semiconductor stocks .SOX were outperforming with a boost from Samsung Electronics' 005930.KS strong quarterly results.
The pan-European STOXX 600 index .STOXX rose 1.97% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 1.29%.
Meanwhile the euro EUR=EBS sought to claw back from its near two-decade trough against the greenback and avoid going below parity for the first time since December 2002.
"The euro is in freefall and we have not heard any official from the European Central Bank commenting. It's as if they are locked in a bunker," Kevin Thozet, investment committee member at Carmignac asset management, said.
The dollar index =USD rose 0.065%, with the euro EUR= down 0.28% to $1.0153.
The Japanese yen strengthened 0.01% versus the greenback at 135.91 per dollar, while Sterling GBP= was last trading at $1.1997, up 0.56% on the day.
Also Bank of England policymaker Catherine Mann said on Thursday that central banks should move quickly and aggressively when raising interest rates due to the lack of clarity about how long surging inflation will last.
Unlike the Bank of England and the Fed, the ECB has yet to begin raising interest rates despite record high inflation in the euro zone, but the central bank is expected to increase rates by 25 basis points later this month.
U.S. TREASURY YIELDS GAIN
U.S. Treasury yields edged higher on Thursday as investors waited on key jobs data due on Friday for clues about the strength of the economy.
Benchmark 10-year notes US10YT=RR last fell 25/32 in price to yield 3.0019%, from 2.911% late on Wednesday. The 2-year note US2YT=RR last fell 5/32 in price to yield 3.0489%, from 2.961%.
Oil prices rose steeply on Thursday after sharp losses in the previous two sessions, as investors returned their focus to tight supply even as fears of a global recession persisted.
U.S. crude CLc1 recently rose 5.83% to $104.27 per barrel and Brent LCOc1 was at $106.07, up 5.34% on the day.
Spot gold XAU= added 0.2% to $1,741.51 an ounce, while U.S. gold futures GCc1 gained 0.59% to $1,745.20 an ounce.
Earlier, Asian stocks gained, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up 1% from a two-month low.
South Korea's KOSPI index .KS11 had gained 1.8% with a boost from Samsung, which reported its best second-quarter profit since 2018 on strong sales of memory chips to server computer makers even with demand from smartphone makers cooling.
World FX rates YTD Link
Global asset performance Link
Asian stock markets Link
Inverted U.S. Treasury curve a harbinger of recession Link
Euro/dollar heading towards parity? Link
Reporting by Huw Jones in London, Tom Westbrook in Singapore
and Sam Byford in Tokyo; Editing by Bernadette Baum and Chris
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.