Equity markets around the world climbed to approach a six-month high on Tuesday, buoyed by a rebound in Chinese stocks, while corporate earnings helped push Wall Street’s benchmark S&P 500 index towards record levels.
Oil prices advanced as the United States’ revived sanctions against major crude exporter Iran.
The rise in stock prices prompted investors to sell safe-haven investments ahead of the first piece of this week’s $78-billion quarterly government refunding, sending U.S. Treasury yields higher.
“It’s the bounce in stocks and other risky assets that caused an uptick in yields,” said Mike Lorizio, head of U.S. Treasuries trading at Manulife Asset Management in Boston.
The Dow Jones Industrial Average rose 171.68 points, or 0.67 per cent, to 25,673.86, the S&P 500 gained 11.49 points, or 0.40 per cent, to 2,861.89 and the Nasdaq Composite added 20.95 points, or 0.27 per cent, to 7,880.63.
MSCI’s gauge of stocks across the globe gained 0.61 per cent, while the pan-European FTSEurofirst 300 index rose 0.72 per cent.
Canada’s main stock index erased early gains in a broad-based retreat on Tuesday, as rising oil prices failed to boost shares of energy companies.
At 11:33 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite index was down 89.24 points, or 0.54 per cent, at 16,331.00.
Ten of the index’s 11 major sectors were lower. Only health care stocks rose in morning trading, sitting up 1.1 per cent.
Gold producers led materials stocks down 1.3 per cent. Alamos Gold Inc. and Agnico Eagle Mines Ltd. fell 3.2 per cent, while Goldcorp Inc. and Barrick Gold Corp. dropped 1.8 per cent.
After rising in early trading, energy stocks fell 0.4 per cent. Tourmaline Oil Corp. dropped 3.2 per cent, while Vermilion Energy Inc. was down 1.1 per cent.
Powered by gains in technology stocks and a strong second-quarter U.S. earnings season amid economic optimism, the S&P 500 was within reach of a record peak it hit on Jan. 26.
Shares of Google’s parent Alphabet, Microsoft and Facebook were up between 0.3 per cent to 0.7 per cent.
Chinese stocks rebounded overnight on hopes of fresh government spending, following a four-day selloff that had knocked them down about 6 percent.
Stock markets in London, Paris and Frankfurt then rose 0.7 per cent to 1 per cent as Europe’s investors cheered both the move up in commodity stocks and results from Italy’s biggest bank UniCredit
Currency markets remained volatile, although less so than in recent sessions, as the dollar dipped.
The U.S. dollar weakened against the euro as the Chinese yuan showed more stability.
The euro bounced to $1.16 from a near six-week low despite a second day of disappointing German economic data, while sterling recouped some ground after Brexit worries had pushed it to an 11-month low.
Sterling fell to a five-month low against the euro as the latter rebounded and investors fretted Britain could crash out of the European Union without securing a trade deal.
Turkey’s lira recovered as much as two percent from Monday’s losses of more than five percent after Washington moved to end duty-free access to U.S. markets for some Turkish exports.
The U.S. Treasury Department will sell $34 billion in three-year notes at 1 p.m. in the largest three-year auction in eight years. It will sell a record amount of 10-year debt worth $26 billion on Wednesday, and an all-time high of $18 billion in 30-year bonds on Thursday.
Oil prices rose about 1 per cent on Tuesday after U.S. sanctions on Iranian goods went into effect, intensifying concerns that sanctions on Iranian oil, expected in November, could cause supply shortages.
Brent crude oil futures rose 89 cents to $74.64 per barrel and U.S. West Texas Intermediate (WTI) crude futures were up 52 cents at $69.53 a barrel.
The first U.S. sanctions against OPEC member Iran officially came into effect at 12:01 a.m. EDT. These sanctions did not include Iran’s oil exports. The country exported almost 3 million barrels per day (bpd) of crude in July.
The reimposed sanctions target Iran’s U.S. dollar purchases, metals trading, coal, industrial software and its auto sector.
U.S. sanctions on Iran’s energy sector are set to be re-imposed after a 180-day “wind-down period” ending on Nov. 4.
“It is a reality check that this is happening and that Iran’s oil exports will be hurt when the oil sanctions hit it in November,” chief commodities analyst at Commerzbank Bjarne Schieldrop said.