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US stocks jump 2 per cent after recent selloff, yen drops vs dollar

US stocks jump 2 per cent after recent selloff, yen drops vs dollar

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US Jun 14, 2022. (Photo: Reuters/Brendan McDermid)

NEW YORK: Stocks on global indexes rose sharply on Tuesday (Jun 21), with major US stock indexes each ending up more than 2 per cent following a recent selloff, while the Japanese yen fell against the US dollar to its lowest level since October 1998.

Wall Street climbed as participants returned from a long weekend, with investors buying up shares of mega-cap growth and energy companies hit last week by global economic worries.

Energy shares climbed along with oil prices. Oil gained on high summer fuel demand.

"After back-to-back weeks of 5 per cent declines, you've pushed the ball under the water far enough now that we're getting a bounce," said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

But, Nolte said, "interest rates are still going higher. Oil is still going higher."

Expectations of interest rate hikes from major central banks and worries about a global recession have kept investors on edge. Central banks are expected to tighten policy to combat high inflation.

The Dow Jones Industrial Average rose 641.47 points, or 2.15 per cent, to 30,530.25, the S&P 500 gained 89.95 points, or 2.45 per cent, to 3,764.79 and the Nasdaq Composite added 270.95 points, or 2.51 per cent, to 11,069.30.

The pan-European STOXX 600 index rose 0.35 per cent and MSCI's gauge of stocks across the globe gained 1.83 per cent.

US Treasury yields were higher as the risk-off mode that weighed on US markets last week took a breather.

Benchmark 10-year yields were at 3.31 per cent, up from their 3.24 per cent close at the end of last week.

All eyes are now on Fed Chair Jerome Powell's testimony to the Senate Banking Committee on Wednesday for clues on rates.

Goldman Sachs has said it now thinks there is a 30 per cent chance of the US economy tipping into a recession over the next year, up from its previous forecast of 15 per cent.

In the foreign exchange market, the Japanese yen plunged against the US dollar to 136.33 per dollar.

Japanese Prime Minister Fumio Kishida said the central bank should maintain its current ultra-loose monetary policy. This makes it an outlier among other major central banks.

Brent crude futures rose 52 cents, or 0.5 per cent, to settle at $114.65 a barrel. The U.S. West Texas Intermediate (WTI) crude contract for July expired on Tuesday, closing at $110.65, with a gain of US$1.09, or 1 per cent. The more active August contract was up US$1.53 at US$109.52.

Spot gold dropped 0.3 per cent to US$1,832.27 an ounce.

Source: Reuters/yb

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