Global shares rose on Tuesday, driven by a recovery on Wall Street, where investor focus is pinned on earnings reports from the U.S. megacaps, while the yen hit a new 34-year low against the dollar, prompting a warning from Japanese officials.
The MSCI All-World index (.MIWD00000PUS), opens new tab, which on Friday hit a two-month low, was up 0.2%, lifted by gains in Europe, where the FTSE 100 (.FTSE), opens new tab hit a record high, while the STOXX 600 (.STOXX), opens new tab traded at one-week highs thanks to the technology sector.
Adding to the optimism was a series of surveys of business activity that showed Germany returned to growth in early April after months of contraction, while activity in the broader euro zone expanded at its fastest clip in nearly a year. Investors are less concerned right now about the threat of a major re-escalation of tension in the Middle East and more focused on earnings. Against that backdrop, gold is heading for a week-on-week drop of 3.2%, its largest this year, while oil has backed off last week's highs.
"We are turning a bit more positive on risk sentiment. There still remains a fair bit of uncertainty around geopolitics and rising U.S. real yields, but we are more positive than we were a week ago," Mohit Kumar, a strategist at Jefferies, said.
The dollar retreated from its recent highs, but is comfortably supported by the view among investors that no rate cuts will be forthcoming any time soon from the Federal Reserve and by the climb this month in Treasury yields to their highest since November. We're talking about European natural gas prices, and my guest is Wayne Bryan, director for natural gas at the London Stock Exchange Group.
On Wall Street, big tech shares outperformed ahead of quarterly results this week, sending the Nasdaq (.IXIC), opens new tab 1.1% higher. AI darling Nvidia (NVDA.O), opens new tab gained 4.4% while Amazon.com (AMZN.O), opens new tab rose 1.5% and Alphabet (GOOGL.O), opens new tab jumped 1.4%, although Tesla (TSLA.O), opens new tab dropped 3.4 as it cut prices in its major markets. Tuesday brings a wealth of big-cap earnings, including Tesla, PepsiCo , UPS (UPS.N), opens new tab, Lockheed Martin (LMT.N), opens new tab and Halliburton (HAL.N), opens new tab
"Odds are the earnings reports that we see over the next few weeks will be positive, but obviously there's still issues around what the Fed will do the next," said Shane Oliver, chief economist at AMP. "It's too early to say that problems in the Middle East have gone away." "There are lots of things that could cause volatility between now and the end of the year. And so we're probably coming to a more constrained, more volatile period for markets."
