European stocks climbed alongside U.S. futures on Tuesday, even as a rebound in oil prices signaled scepticism that the U.S.-Iran war will resolve quickly through diplomacy. The S&P 500 closed Monday just below its all-time high, and the yen eased slightly while holding onto most of last week's intervention-driven gains.
Oil rebounds after new Hormuz attack
A fresh attack on shipping in the Strait of Hormuz added to uncertainty already stirred by conflicting signals from Washington and Tehran. Brent crude rose 1.4% to $84.95 a barrel. That rebound followed a 7% drop in the previous session to a three-week low.
Wall Street closes near record highs
Stocks shrugged off the tension regardless. Europe's STOXX 600 rose 0.55%, with technology shares up 1.7%. Nasdaq futures climbed 0.67% and S&P 500 futures rose 0.22%. That built on Monday's session, when the S&P 500 jumped 1.48% to 7,610.04, just short of its all-time high of 7,620.90, while the Dow Industrials closed at a record. MSCI's main world stocks index rose 0.05% and Japan's Nikkei gained 0.32%.
According to Jefferies economist Mohit Kumar: "We are adding risk to sectors which should be less impacted by higher rates." He pointed to tech and financials as the firm's favored sectors for adding back risk.
Fed uncertainty and earnings support the mood
Longer-dated U.S. Treasury yields rose to a 19-year high last week after comments from Federal Reserve Chairman Kevin Warsh raised concern the Fed may not act aggressively against inflation. Market participants believe Warsh does not want to hike, and incoming data could give him cover to hold, with the first round of U.S. jobs data due later Tuesday. Nearly two-thirds of S&P 500 companies have now reported for the second quarter, and 84% have beaten earnings estimates, according to LSEG data. Still, some economists warn Europe's economy faces a tougher outlook than other regions, as drought hampers Rhine shipping and gas inventories stay under pressure.
Yen eases but holds most of intervention gains
The dollar rose 0.4% to 157.80 yen, rebuilding some strength after coordinated intervention by U.S. and Japanese authorities to support the currency last week. Yet the yen remains about 4% stronger against the dollar than the levels a week earlier that prompted the support — the first U.S. intervention in the Japanese foreign-exchange market in 15 years.
Market participants worry that Japan's expansionary fiscal policy and the Bank of Japan's gradual pace of rate hikes could weigh on the currency. The U.S. dollar index, which tracks the greenback against six major currencies, traded steady near its lowest level in two months at 99.98.
Source: Economy News
Trading involves risk.
Risk Disclaimer
