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Stocks march on; Treasury yields, dollar hit by weak consumer confidence

Stocks march on; Treasury yields, dollar hit by weak consumer confidence

FILE PHOTO: A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, New York, U.S., July 19, 2021. REUTERS/Andrew Kelly/File Photo

NEW YORK : Global stock markets hit new record highs on Friday, boosted by forecast-beating corporate earnings, but the dollar and Treasury yields fell after data showed U.S. consumer confidence plummeted in early August.

The University of Michigan's survey showed consumer confidence falling to its lowest level since 2011 in the first half of this month. The decline marked one of the six largest drops in the past 50 years of the survey.

The unexpectedly weak reading could give Federal Reserve policymakers reason to pause on a decision over whether to begin

pulling back the extraordinary stimulus it put in place to shield the U.S. economy from the COVID-19 pandemic.

"The renewed plunge suggests the latest wave of virus cases driven by the Delta variant could be a bigger drag on the economy than we had thought," said Andrew Hunter, an economist at Capital Economics.

Pandemic-era stimulus has been behind much of the surge in stock prices the past year, but massive corporate earnings have given the rally new legs in recent weeks.

"If we look at the earnings trajectory, it still lends a lot of support to the valuations in the market," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. "Earnings season provided some comfort and stability."

The MSCI world equity index, which tracks shares in 50 countries, hit a fresh record high.

MSCI's gauge of stocks across the globe gained 0.22per cent.

The S&P 500 and Dow Jones Industrial Average closed at record highs. Walt Disney was a star performer, climbing 1.6per cent after its earnings topped market forecasts.

The Dow Jones Industrial Average rose 16.06 points, or 0.05per cent, to 35,515.91, the S&P 500 gained 7.26 points, or 0.16per cent, to 4,468.09 and the Nasdaq Composite added 6.64 points, or 0.04per cent, to 14,822.90.

European stocks scaled new highs and clocked their fourth consecutive week of gains on optimism over a strong earnings season and steady recovery from the pandemic-led economic downturn.

The pan-European STOXX 600 index rose 0.2per cent to a record high of 476.16, for the tenth straight session. The index has now matched its best winning streak since December 2006.

Not everyone is convinced the rally can continue, however.

"We feel a bit more cautious headed into autumn because of uncertainty on the health front, the Chinese regulatory front and the monetary policy front," said Paul O'Connor, head of multi-asset at Janus Henderson.

Gold rose as tapering concerns eased.

Spot gold added 1.5per cent to US$1,778.31 an ounce.

U.S. gold futures settled up 1.5per cent at US$1,778.20.

U.S. benchmark 10-year Treasury yields tumbled and the dollar weakened after the consumer confidence survey, bolstering gold's appeal.

Benchmark 10-year notes last rose 24/32 in price to yield 1.2884per cent, from 1.367per cent late on Thursday.

The dollar index fell 0.516per cent, with the euro up 0.59per cent to US$1.1796.

Worries about a regulatory crackdown in China and a surge in the COVID-19 Delta variant have sapped confidence in Asia, where markets mostly declined.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.56per cent, and was 0.8per cent lower for the week.

Chinese blue chips weakened 0.55per cent, dragged down by the local semiconductor sub-index, which slumped 4.1per cent.

Oil fell on Friday, but was on track to post a slight weekly gain, broadly shrugging off a warning from the International Energy Agency that the spread of coronavirus variants is slowing oil demand.

U.S. crude futures settled at US$68.44 per barrel, down 65 cents or 0.94per cent. Brent crude futures settled at US$70.59 per barrel, down 72 cents or 1per cent.

Graphic: Stoxx 600 https://fingfx.thomsonreuters.com/gfx/mkt/xmpjogzzavr/stoxxper cent20600.PNG

(Reporting by Matt Scuffham in New York; Additional reporting by Evan Sully and Lindsay Dunsmuir; Editing by David Evans and Matthew Lewis)

Source: Reuters

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