Global stocks jump as Treasury yields ease and oil prices sell off

NEW YORK, Sept 8 — Global stocks rallied yesterday after recent losses as benchmark US Treasury yields eased from three-month highs and oil prices fell below US$90 (RM405.15) a barrel.

The dollar surged to a 24-year peak against the yen and a 37-year high versus sterling, but the dollar index was lower on the day.

Brent crude futures touched their lowest since early February, falling below levels seen prior to Russia’s invasion of Ukraine. Data showing China’s export growth slowed in August fuelled demand worries.

Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina, said given the oversold conditions of stocks, it did not take much to create a bounce.

Oil prices fell and the dollar index weakened, and “those are two good catalysts,” she said.

Benchmark US Treasury yields slipped after earlier hitting three-month highs, with the 10-year note yield ast at 3.28 per cent, ahead of Federal Reserve Chair Jerome Powell’s speech today.

Concerns that inflation will remain persistently high and keep driving interest rates higher had lifted yields in recent weeks.

Investors have been anxious for more news from central banks on the trajectory of global interest rates.

The European Central Bank is widely expected to raise interest rates sharply when it meets this week, while the US central bank is expected to raise rates by another 75 basis points at its September 20 to 21 meeting.

All major S&P 500 sectors rose on the day apart from energy, which fell 1.2 per cent with the slide in oil prices.

The Dow Jones Industrial Average rose 435.98 points, or 1.4 per cent, to 31,581.28, the S&P 500 .SPX gained 71.68 points, or 1.83 per cent, to 3,979.87 and the Nasdaq Composite .IXIC added 246.99 points, or 2.14 per cent, to 11,791.90.

The pan-European STOXX 600 index lost 0.57 per cent and MSCI’s gauge of stocks across the globe gained 1.06 per cent.

US stocks had been selling off since mid-August after hawkish comments from Powell and signs of an economic slowdown in Europe and China.

Helping the US dollar recently, Japan’s dovish monetary policy and Europe’s economic problems have contrasted with a relatively stronger US economy and a hawkish Fed.

The US currency soared as high as ¥144.99, hitting the level for the first time since August 1998. It is now within a large leap of its 1998 high of 147.43. The dollar was last up 0.9 per cent at ¥144.09.

Against sterling, the greenback hit US$1.1407, the lowest since 1985 and last down 0.1 per cent at US$1.1509.

Liz Truss, who took over as Britain’s prime minister on Tuesday, vowed immediate action to help the economy, which faces double-digit inflation and an expected lengthy recession.

The euro fell below 99 cents after dipping as low as US$0.9864 on Tuesday, its lowest since October 2002.

Yesterday, Europe’s single currency was last up 0.8 per cent at US$0.9985, and the US dollar index, which measures the greenback against a basket of currencies, was last down 0.7 per cent.

In the energy market, Brent crude futures settled down US$4.83 at US$88 a barrel, falling below US$90 a barrel for the first since February 8.

US West Texas Intermediate crude settled down US$4.94, or 5.7 per cent, to US$81.94, its lowest since January. — Reuters