Global stocks gain as earnings provide some optimism; 10-year yield climbs

On Wall Street, the technology sector boosted the S&P 500 the most, while recent stronger-than-expected results have bumped up the forecast for S&P 500 earnings for the third quarter. — Reuters pic
On Wall Street, the technology sector boosted the S&P 500 the most, while recent stronger-than-expected results have bumped up the forecast for S&P 500 earnings for the third quarter. — Reuters pic

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NEW YORK, Oct 19 — Stock indexes around the world jumped yesterday as US technology shares extended recent gains and earnings reports were upbeat, while the 10-year US Treasury yield rose to its highest in more than four months.

The US dollar was lower on the day as other currencies, including sterling, were supported by investor expectations that interest rates could be increased sooner than some had forecast.

On Wall Street, the technology sector boosted the S&P 500 the most, while recent stronger-than-expected results have bumped up the forecast for S&P 500 earnings for the third quarter.

Investors remain worried, however, about the impact that higher costs, supply disruptions and labour shortages are having on companies.

“The key for the market to going up from here will not be higher multiples, it will have to be higher earnings. That’s why it’s so important to pay attention to what those profit margins do going forward and what the trajectory of GDP looks like,” said Eric Marshall, portfolio manager at Hodges Funds.

Among US companies reporting results yesterday, insurer Travellers Cos Inc beat estimates for third-quarter profit and its shares rose. Johnson & Johnson raised its 2021 adjusted profit forecast and its shares jumped 2.3 per cent.

The Dow Jones Industrial Average rose 198.7 points, or 0.56 per cent, to 35,457.31, the S&P 500 gained 33.17 points, or 0.74 per cent, to 4,519.63 and the Nasdaq Composite added 107.28 points, or 0.71 per cent, to 15,129.09.

The pan-European STOXX 600 index rose 0.33 per cent and MSCI’s gauge of stocks across the globe gained 0.73 per cent.

The MSCI index reached its highest in about a month.

The dollar index against a basket of other currencies was last down 0.22 per cent on the day at 93.73, after earlier dropping to 93.50, the lowest since September 28.

The euro gained 0.25 per cent to US$1.1640 (RM4.86). Currencies, including sterling and the New Zealand dollar, are benefiting from rising interest rate increase expectations.

Bitcoin last rose 3.49 per cent to US$64,201.08.

In the US Treasury market, the yield curve widened, reversing the recent trend.

In afternoon US trading, US 10-year yields were last up nearly six basis points at 1.6407 per cent. The yield hit a 4-1/2-month peak of 1.6440 per cent.

The US 5-year yield, which has been on a tear the last two weeks, was last down at 1.1586 per cent.

Oil prices climbed and were near multi-year highs as an energy supply crunch continued across the globe. Brent crude rose 75 cents to settle at US$85.08 a barrel. US West Texas Intermediate (WTI) futures rose 52 cents to settle at US$82.96.

In other commodities, US gold futures gained 0.15 per cent to US$1,769.70 an ounce. — Reuters

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