Stocks Lifted by Upbeat Earnings, Stable Commodity Prices

By Riva Gold and Kenan Machado Features Dow Jones Newswires

Global stocks were mostly firmer Tuesday, bolstered by steadying commodity prices and upbeat earnings reports.

Continue Reading Below

The Stoxx Europe 600 was up 0.5% midday, led by shares of miners, energy companies and banks. Brent crude oil extended gains to $49.50 a barrel, while copper futures edged up 0.3% after falling for four of the last five sessions.

Steep falls in commodity prices---in part attributed to China's moves to tighten credit---have been a source of worry for investors this month. Europe's basic resources sector climbed 1.2% Tuesday, but remained the month's worst-performing sector to date.

Shares of Commerzbank also gave a lift to the banking sector after it reported higher-than-expected profit and revenue in the first quarter.

Futures pointed to a small opening rise for the S&P 500 on Tuesday, after late gains in shares of Apple Inc. and a rise in energy companies helped lift the S&P 500 and Nasdaq Composite to fresh highs.

Shares of Marriott International were among the best performers in pre-market trading after the hotelier's earnings a share came in slightly above expectations.

Continue Reading Below

"There is a strong economic backdrop and robust earnings: That environment is conducive to being invested [in stocks]," said Mouhammed Choukeir, chief investment officer at Kleinwort Hambros.

Mr. Choukeir favors European equities, where he says companies are posting better-than-expected earnings in a healthy economy and trade at lower valuations than their U.S. counterparts. "People are starting to believe that maybe the European story is back on its feet," he said.

European stocks on Tuesday were on track for their highest close since 2015 after a slight wobble on Monday, while a survey measuring economic sentiment in the eurozone, released this week by Frankfurt-based research firm Sentix, climbed to its highest since the start of 2008 in April.

Market volatility has also subsided, and investors are betting that is not likely to change in the near future. A widely watched measure of investor anxiety, the CBOE Volatility Index, fell to its lowest level since 1993 on Monday.

"Intraday moves have been relatively small compared to history," said Richard Crist, head of trading services at QMA, which manages approximately $120.5 billion in assets. "Markets haven't really moved much except when we've had commentary come out of Washington," he said.

The VSTOXX measure of volatility implied by Euro Stoxx 50 options has also dropped, last hovering around 14.3, down 39% from a month ago.

In currencies, the WSJ Dollar Index was up 0.3% ahead of speeches from Federal Reserve officials. Cleveland Fed President Loretta Mester on Monday called for the central bank to raise rates and said it can likely start shrinking its holdings of bonds and other assets later this year.

Fed-fund futures tracked by CME Group currently show investors see a nearly 88% chance of a rate rise in June.

The euro extended declines and was last down 0.3% at $1.0895 after its biggest daily decline in over a month, as traders took profits following the expected victory of centrist candidate Emmanuel Macron in France's presidential election on Sunday.

In bond markets, 10-year German bund yields inched up to 0.427% from 0.417% and French yields climbed to 0.791% from 0.768% as investors shifted focus from eurozone political risks to the European Central Bank's next move.

10-year U.S. Treasury yields rose to 2.393% from 2.376%. Yields move inversely to prices.

Earlier, Australia's S&P ASX 200 fell 0.5% as underwhelming results from Commonwealth Bank of Australia and reports that the Australian government would introduce a bank tax weighed on shares of lenders.

Hong Kong's Hang Seng Index rose 1.3%, supported by a recovery in shares of gambling companies and as Chinese markets pared losses that had been stoked by concerns about a clampdown in speculative trading. Stocks in Shenzhen were up 0.7% while the Shanghai Composite Index was up 0.1% after five sessions of losses.

"We are approaching the end of the tightening cycle," said Caroline Yu Maurer, head of Greater China Equities at BNP Paribas Investment Partners.

"What [Chinese authorities] are trying to do is squeeze out some of the irregularities without hitting liquidity." She thinks large Chinese insurance and banking stocks listed in Hong Kong will benefit from lower competition and better liquidity owing to their size and ability to source funds.

Japanese stocks pulled back 0.3% after Monday's jump to 17-month highs, despite a modest fall in the yen. Japanese wages fell for the first time since last May, government data showed.

Bank of Japan Gov. Haruhiko Kuroda said he would act "quickly" to expand stimulus measures if inflation loses traction, but noted no additional steps are needed at the moment.

Saurabh Chaturvedi

, Takashi Nakamichi,

Robb Stewart

and Suryatapa Bhattacharya contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Kenan Machado at kenan.machado@wsj.com

U.S. stock indexes climbed Tuesday, as a jump in shares of technology companies offset losses in the energy sector.

The Dow Jones Industrial Average added 23 points, or 0.1%, to 21036 shortly after the opening bell. The S&P 500 rose 0.2% and Nasdaq Composite gained 0.5% after both indexes inched higher Monday to settle at record highs.

Major stock indexes have risen the past few weeks as stronger-than-expected corporate earnings have helped offset a steep decline in commodity prices. With more than 87% of S&P 500 firms having reported earnings, companies are on track to post their highest proportion of top- and bottom-line beats in 13 years, according to Bank of America Merrill Lynch.

"There is a strong economic backdrop and robust earnings: That environment is conducive to being invested [in stocks]," said Mouhammed Choukeir, chief investment officer at Kleinwort Hambros.

U.S. crude oil fell 0.8% to $46.05 a barrel on Tuesday, weighing on shares of energy companies. Energy stocks in the S&P 500 -- the worst performers in the broad index in 2017 -- fell 0.5%, deepening their losses for the year.

Technology shares in the S&P 500 jumped 0.5%, giving major indexes a boost. Shares of Apple, which posted a record close Monday, extended their ascent, rising 0.9% to $154.42 and posting among the biggest gains in the Dow industrials.

As stocks rose, government bonds slipped Tuesday, with the yield on the 10-year U.S. Treasury note rising to 2.401%, according to Tradeweb, from 2.376% Monday. Yields rise as bond prices fall.

Elsewhere, the Stoxx Europe 600 added 0.4%, on track for its best finish since 2015. Shares of Commerzbank gave a lift to Europe's banking sector after the company reported higher-than-expected profit and revenue in the first quarter.

Australia's S&P ASX 200 fell 0.5% as underwhelming results from Commonwealth Bank of Australia and reports that the Australian government would introduce a bank tax weighed on shares of lenders.

Hong Kong's Hang Seng Index rose 1.3%, supported by a recovery in shares of gambling companies.

Japan's Nikkei Stock Average pulled back 0.3% after government data showed Japanese wages fell for the first time since last May.

Kenan Machado contributed to this article

Write to Riva Gold at riva.gold@wsj.com and Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

May 09, 2017 10:44 ET (14:44 GMT)