World Stocks Report- August 7, 2024

Stock indexes around the world rose on Wednesday with help from U.S. economic data while the dollar strengthened against the yen after cautious comments from the Bank of Japan.

BOJ Deputy Governor Shinichi Uchida said the central bank will not raise interest rates when financial markets are unstable, causing the yen to sink. But in equities, the Nikkei added 1% after Tuesday’s 10% rally, suggesting increased appetite for risk.

Stocks were supported as interest rates for the most popular U.S. home loan plunged last week to their lowest levels in 15 months, after the Federal Reserve said it could start cutting rates in September. The Mortgage Bankers Association also said on Wednesday that refinancing applications hit the highest level in two years.

The BoJ comments, Tuesday’s risk-on rally and Wednesday’s data were good signs for consumers, said Gene Goldman, chief investment officer at Cetera Investment Management.

“Now you have optimism around consumer spending and maybe the economy is not as bad (as feared) as people are able to refinance mortgages,” he said. “It’s more money in their pockets.”

On Wall Street at 11:12 a.m. ET, the Dow Jones Industrial Average rose 410.41 points, or 1.05%, to 39,408.07. The S&P 500 gained 79.56 points, or 1.52%, at 5,319.59 and the Nasdaq Composite climbed 300.10 points, or 1.83%, to 16,666.96.

MSCI’s gauge of stocks across the globe rose 11.68 points, or 1.51%, to 782.67 while Europe’s STOXX 600 index rose 1.63%.

In currencies, the yen dropped after the BoJ comments on hikes, which soothed investors’ concerns that a further jump in the Japanese currency could again roil global markets.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, gained 0.15% at 103.13.

Against the yen, the dollar strengthened 2.22% to 147.51 while the euro was up 0.03% at $1.0933.

In U.S. Treasuries, yields rose before the Treasury Department’s auction of $42 billion in 10-year notes. Investor appetite for stocks reduced demand for safe-haven U.S. debt.

The yield on the benchmark U.S. 10-year note rose 6.8 basis points to 3.956%, from 3.888% late on Tuesday.

The 2-year note yield, which typically moves in step with interest rate expectations, rose 4.7 basis points to 4.0323%, from 3.985%. The 30-year bond yield rose 6 basis points to 4.2374% from 4.177%.

Oil prices climbed on concerns that an escalating Middle East conflict could hurt oil production, even as worries about weak crude demand persisted. [O/R]

U.S. crude gained 3.21% at $75.55 a barrel and Brent rose to $78.62 per barrel, up 2.8% on the day.

In precious metals, spot gold added 0.43% at $2,399.70 an ounce. U.S. gold futures rose 0.47% to $2,400.40 an ounce.