Google helps stock markets recover, oil tops $75
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[April 24, 2018]
By Dhara Ranasinghe
LONDON (Reuters) - World stocks steadied on
Tuesday after three sessions of losses thanks to strong earnings from
the likes of Google and as a rise in benchmark U.S. bond yields towards
3 percent stalled, while oil prices stretched to fresh highs above $75 a
U.S. stock futures pointed to a firm open on Wall Street <ESc1> <1YMc1>,
although European shares <.STOXX> were mixed with stock markets in
London <.FTSE> and Frankfurt <.GDAXI> around 0.3 percent higher and
shares in Paris <.FCHI> flat.
Markets brushed off further signs that European powerhouse economy
Germany is losing some of its momentum, with the Ifo business climate
index falling in April.
In Asia, Japan's Nikkei <.N225> added 0.9 percent as a lower yen
supported export-heavy firms and Chinese shares posted their strongest
gains in two months <.CSI300> <.SSEC>.
That left MSCI's world equity index <.MIWD00000PUS> a tad higher after
three days of declines.
The recovery in stocks came as bond markets also bounced back from a
selloff. U.S. 10-year Treasury yields came within striking distance of
the psychologically significant barrier of 3 percent <US10YT=RR> on
Monday, which in the past has triggered market spasms.
"There's a tug and a pull from all kinds of things in equity markets
right now, such as the approach of U.S. bond yields to 3 percent, but I
don't think that would be the end of the world," said Lukas Daalder,
chief investment officer at Robeco.
Earnings meanwhile, especially from the tech sector, were in focus after
a turbulent few months for leading U.S. tech firms.
Google parent Alphabet <GOOGL.O> was up slightly in volatile after-hours
trading on Monday after the tech giant reported a 73 percent jump in
profits in the first quarter.
Chipmaker AMS <AMS.S> reported first-quarter sales towards the lower end
of its guidance range on Monday and warned of a downturn owing to weaker
orders from one of its main customers.
AMS did not name the customer, but the Austrian company is a big
supplier to Apple <AAPL.O>, making components for the iPhone.
SAP <SAP.G>, Europe's largest tech company by stock market valuation,
meanwhile announced upbeat results in the seasonally tough first
Of around 18 percent of the companies in the S&P 500 that have already
reported, 78.2 percent beat consensus estimates.
Brent crude oil prices, the global benchmark, rose above $75 a barrel
<LCOc1> to their highest level since November 2014, supported by
OPEC-led production cuts, strong demand and the prospect of renewed U.S.
sanctions on Iran. [O/R]
[to top of second column]
A man walks through light rain in front of the Hey Google booth
under construction at the Las Vegas Convention Center in preparation
for the 2018 CES in Las Vegas, Nevada, U.S. January 8, 2018.
REUTERS/Steve Marcus/File Photo GLOBAL BUSINESS WEEK AHEAD
U.S. West Texas Intermediate crude futures <CLc1> were 0.5 percent higher at
$69.11 a barrel.
A rally in oil prices and renewed focus on the inflation outlook has added to
upward pressure on bond yields recently.
"It is this move higher in crude oil prices, along with the rise in demand, that
is helping fuel the recent rise in yields as well as the positive tone for
equity markets," said Michael Hewson, chief market analyst at CMC Markets in
"However if it continues too far we could start to see it act as a drag on
equity markets, if prices along with yields start to move even higher."
ALL ABOUT BONDS
The fallout from rising U.S. bond yields, which have helped lift U.S. financial
stocks, continued to be felt in currency markets.
The euro nursed losses at a two-month low on growing concerns that firmer
Treasury yields would reduce incremental demand for the region's bonds and
stocks at a time when hedge funds have amassed record long bets on the single
It stabilized around $1.22 on Tuesday after having slumped to $1.2185 in Asia,
its lowest since March 1.
The dollar set a two-month high of 108.87 yen <JPY=EBS> and was holding near
Elsewhere, aluminum <CMAL3> hit its lowest in nearly two weeks, extending
declines from the previous day after Washington gave U.S. companies more time to
comply with sanctions on Russian producer Rusal <0486.HK> and hinted at further
(This version removes inadvertently repeated paragraph on euro)
(Reporting by Dhara Ranasinghe; Additional reporting by Hideyuki Sano in TOKYO,
Swati Pandey in SYDNEY and Saikat Chaterjee in LONDON; Editing by Andrew Heavens
and Hugh Lawson)
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