Global stocks rise after S&P correction while safe-haven gold touches record
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NEW YORK/ LONDON :Stock indexes around the world were angling to end a bumpy week on a positive note although safe-haven gold hit a record high with investors still showing some signs of anxiety about the economic impact of tariffs.
In Europe, German government bond yields and the euro rose on Friday with German Chancellor-in-waiting Friedrich Merz saying he had secured crucial backing of the Greens for a massive increase in state borrowing.
Germany's news also helped boost U.S. Treasury yields, according to Garrett Melson, portfolio strategist at Natixis Investment Managers. He attributed equity gains on Friday to the fact that the S&P 500 confirmed it was in a correction on Thursday.
"It's a reflection of the pain we've already endured in markets. It's been a sharp decline from the highs in mid-February," said Melson.
"You're seeing some signs of it at least getting an intermediate low and a little bit of a relief rally," he said. "There's not really anything meaningful in the way of news to really drive a rally other than just the technicals."
On Wall Street, at 11:46 a.m. the Dow Jones Industrial Average rose 571.88 points, or 1.40 per cent, to 41,385.45 while the Nasdaq Composite rose 407.61 points, or 2.36 per cent, to 17,710.63. The S&P 500 rose 102.39 points, or 1.85 per cent, to 5,623.87.
The benchmark index finished Thursday more than 10 per cent below its February record close after U.S. President Donald Trump threatened to impose a 200 per cent tariff on European wine and spirit imports, the latest trade war escalation after the European Union retaliated against U.S. tariffs on steel and aluminium.
This was just a week after the Nasdaq confirmed a correction, also with tariff and growth uncertainties in play.
MSCI's broadest gauge of global stocks rose 13.19 points, or 1.61 per cent, to 834.78 on Friday but was still eyeing its biggest weekly fall since December.
Also on Friday, Spot gold breached $3,000 an ounce for the first time in early London trading before losing ground. The precious metal is still up more than 13 per cent year-to-date, as trade wars and growth worries boosted its safe-haven appeal.
Spot gold fell 0.19 per cent to $2,981.99 an ounce. U.S. gold futures rose 0.07 per cent to $2,986.50 an ounce.
The yield on the benchmark German 10-year Bunds rose 2.6 basis points to 2.88 per cent, from 2.854 per cent late on Thursday on hopes the German fiscal agreement would revive growth.
In U.S. Treasuries, yields rose as the stock market recovery reduced safe-haven demand for U.S. government debt.
The yield on benchmark U.S. 10-year notes rose 3 basis points to 4.306 per cent, from 4.276 per cent late on Thursday while the 30-year bond yield rose 2.1 basis points to 4.617 per cent.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 5.6 basis points to 4.009 per cent, from 3.953 per cent late on Thursday.
In currencies, the euro gained broadly due to the reports about Germany. Against the dollar, the euro was up 0.18 per cent at $1.0871 while against the pound it gained 0.47 per cent to 84.17 pence and rose 0.56 per cent to 0.96265 against the Swiss franc.
The dollar gained 0.42 per cent against the Japanese yen to 148.43 and against the Swiss franc, the greenback strengthened 0.37 per cent to 0.885, on hopes the U.S. government would avoid a shutdown over the weekend.
Oil prices regained some ground on Friday after falling sharply in the previous session, as investors weighed diminishing prospects of a quick end to the Ukraine war that could bring back more Russian energy supplies to Western markets.
U.S. crude rose 0.59 per cent to $66.94 a barrel and Brent rose to $70.25 per barrel, up 0.53 per cent on the day.
Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan closed up almost 1 per cent but lost almost 1.5 per cent for the week.
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