Global stocks rebound on cyclical surge, gold edges higher
By Herbert Lash NEW YORK (Reuters) - Global equity markets rebounded on Tuesday, buoyed by a surge in cyclical stocks on Wall Street, in a bet the economic recovery would overcome a rollback of California's reopening, while safe-haven gold prices solidified gains above $1,800 an ounce.
By Herbert Lash
NEW YORK (Reuters) - Global equity markets rebounded on Tuesday, buoyed by a surge in cyclical stocks on Wall Street, in a bet the economic recovery would overcome a rollback of California's reopening, while safe-haven gold prices solidified gains above $1,800 an ounce.
The euro rose versus the dollar on optimism about the possibility of a European Union stimulus package but market participants remained cautious, leading U.S. and euro zone government debt yields to fall.
A decline in U.S. consumer prices that showed core inflation remained well under the Federal Reserve's target of 2% tapped Treasury yields down, as did concerns about lockdown restrictions announced Monday in California.
Europe's broad FTSEurofirst 300 index <.FTEU3> closed down 0.79% and initially weighed on MSCI's world equity index <.MIWD00000PUS> after a decline overnight in Asian equities. The global benchmark index, which tracks shares in 49 nations, turned around 0.14% on a rebounding Wall Street.
Cyclicals outperformed as technology shares were slammed on Wall Street and in Europe, where the tech subsector <.SX8P> fell 2.6% in its biggest one-day sell-off in just over a month.
The Dow Jones Industrial Average <.DJI> rose 1.54%, the S&P 500 <.SPX> gained 0.7% and the Nasdaq Composite <.IXIC> added 0.1% as Apple
Technology and tech-related shares sold off and cyclicals rose, including financials, industrials and energy stocks, said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
"Every once in a while cyclicals will outperform. These are the most beaten-up securities in the market. But they're not the safe trade, which is tech-plus. That's where the growth is," Ghriskey said.
"But the cyclicals are extremely attractive from a valuation standpoint and an ultimate recovery standpoint. They have the most to gain back," he said.
While the rollback of business reopenings may weigh on the economy, new coronavirus infections are hitting younger people and ultimately will not replicate earlier fatality rates, he said.
Oil rebounded. Brent crude
Gold prices inched up, rising above the $1,800 level, underpinned by concerns over mounting coronavirus cases globally and as many regions reintroduced curbs to restrict the outbreak.
U.S. gold futures
Fear can influence gold, said Kristina Hooper, chief global market strategist at Invesco in New York.
"On days when stocks are up and gold is up, part of the story is the Fed has made stocks attractive to investors, but there is apprehension that is driving up gold prices as well," Hooper said.
U.S. consumer prices increased by the most in nearly eight years in June as businesses reopened, but the underlying trend suggested inflation would remain muted and allow the Fed to keep injecting money into the ailing economy.
The U.S. Labor Department's consumer price index rose 0.6% last month, the biggest gain since August 2012, after easing 0.1% in May. The increase ended three months of declines and was driven by the rising price of gasoline and food.
Tension grew between Washington and Beijing after the United States rejected China's claims to offshore resources in most of the South China Sea.
U.S. President Donald Trump scheduled a late afternoon news conference that will be related to Hong Kong and China, two administration officials said.
Tuesday is the deadline for the president to sign legislation approved by the U.S. Congress to penalize banks doing business with Chinese officials who implement Beijing’s draconian new national security law on Hong Kong.
The Shanghai index <.SSEC> fell 0.7% despite official figures showing Chinese exports and imports topped forecasts in June, while China continued to buy significant amounts of commodities, including iron ore. Graphic: Global earnings 2020 forecast - https://fingfx.thomsonreuters.com/gfx/buzz/bdwvkamxdvm/Pasted%20image%201594627756300.png
(Additional reporting by Pete Schroeder in Washington and Paulina Duran in Syndey; editing by Tom Brown and Bernadette Baum)
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By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.