Global stocks rise after S&P 500 correction while safe-haven gold touches record
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NEW YORK/ LONDON :U.S. equities followed European stocks higher on Friday, 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.
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.
The strategist 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 02:43 p.m. the Dow Jones Industrial Average rose 609.02 points, or 1.49 per cent, to 41,422.59 while the S&P 500 rose 104.46 points, or 1.89 per cent, to 5,625.98.
The benchmark index had 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 Europe retaliated against U.S. tariffs on steel and aluminium.
The S&P milestone came just a week after the Nasdaq confirmed it was in a correction, also with tariff and growth uncertainties, as well high valuations for megacap tech stocks in play. On Friday, the Nasdaq Composite rose 405.39 points, or 2.34 per cent, to 17,708.41.
MSCI's broadest gauge of global stocks rose 13.37 points, or 1.63 per cent, to 834.96 on Friday but was still eyeing its biggest weekly fall since December.
Earlier, the pan-European STOXX 600 index had closed up 1.14 per cent.
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 13.7 per cent year-to-date, as trade wars and growth worries have boosted its safe-haven appeal.
However, its time at the record was fleeting with spot gold last down 0.12 per cent at $2,984.19 an ounce.
In fixed income, the yield on the benchmark German 10-year Bunds was last at 2.873 per cent after earlier rising as high as 2.936 per cent.
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 3.2 basis points to 4.308 per cent, from 4.276 per cent late on Thursday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 6.2 basis points to 4.015 per cent, from 3.953 per cent late on Thursday.
"What you've had over the past week or two is a repricing of what's called the Trump put lower for equities, while at the same time, understanding that tariffs are probably here to stay in some form and aren't just a negotiating tactic," said Zachary Griffiths, senior strategist at CreditSights.
In currencies, the euro gained broadly after the reports about Germany. Against the dollar, the euro up 0.26 per cent at $1.088 while against the pound it gained 0.44 per cent and rose 0.56 per cent against the Swiss franc.
Against the Japanese yen, the dollar strengthened 0.47 per cent to 148.51 while against the Swiss franc, the greenback strengthened 0.33 per cent to 0.885, with support from hopes the U.S. government would avoid a shutdown over the weekend.
Oil prices regained 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 settled up 0.95 per cent at $67.18 a barrel for the session while Brent settled at $70.58 per barrel, up 1 per cent, or 70 cents.
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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