Nasdaq hits record as dollar and Treasury yields climb, oil prices ease

Oct 5 : Wall Street equities were buoyed by advances in mega-cap stocks on Monday, as Treasury yields held near multiyear highs, the dollar advanced against the euro, and oil prices relented.

US stock indexes were supported by heavyweight technology companies such as Nvidia , Meta Platforms , and Microsoft . The Dow Jones Industrial Average rose 0.18 per cent, the S&P 500 added about 0.7 per cent, and the Nasdaq Composite gained about 1 per cent, touching a fresh record high.

European shares closed higher even as French equities slid to a six-month low on fiscal concerns and Schneider Electric fell after acquiring US software firm PTC. The pan-European STOXX 600 index ended 0.4 per cent higher, after hitting a four-month low last week as global bond yields surged on inflation, higher corporate bond issuances and worsening fiscal outlooks.

Latin American markets also climbed, led by a rally in Brazilian stocks and the real currency, after right-wing Senator Flavio Bolsonaro outperformed poll predictions in the first round of the presidential election and advanced to a runoff against leftist incumbent Luiz Inacio Lula da Silva.

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MSCI's gauge of stocks across the globe rose 0.7 per cent.

"Relative equity market calm amid the bond market’s 'perfect storm' is understandable, given accelerating economic growth and the AI boom’s rate insensitivity," Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, said in an email.

Shalett wrote that her team was watching three areas for signs of stress: equity market and earnings revisions breadth; high-yield bond spreads; and US dollar strength along with currency market volatility.

The euro recovered some ground to trade at $1.122 after falling by as much as 0.8 per cent to a 17-month low of $1.1160.

The single currency, down about 2.5 per cent last month, has come under pressure as investors fret over France's rising debt and political gridlock ahead of next year's presidential election.

The premium investors demand to hold French 10-year bonds over safer German debt surged above 150 basis points on Friday, fueling concerns of broader contagion across European markets.

"France is the real deal in terms of risk premia for the euro," said Saxo strategist Neil Wilson, noting that French government plans to reduce the budget deficit still face parliamentary scrutiny and could ultimately be watered down.

French 10-year yields stayed below Friday's peak of 4.993 per cent, while German yields were also little changed.

The euro's slide lent fresh support to the dollar, which also drew strength from elevated Treasury yields. The dollar index rose 0.2 per cent.

The dollar's resilience suggests it "may be too soon to write off" its long-term role, BlackRock Investment Institute strategists wrote in a note on Monday.

They added: "With markets pricing more Fed tightening than we think will materialize, there is limited scope for a sustained dollar bull run."

Benchmark 10-year US Treasury yields rose 3.4 basis points to 5.31 per cent. Borrowing costs across major economies remain near multiyear highs as deteriorating public finances, heavy debt issuance and elevated energy prices continue to pressure bond markets.

Figures released last week showed US job growth slowed more than expected in September and payrolls for the previous two months were revised sharply lower, prompting investors to largely rule out a Federal Reserve rate increase this month.

Japan's Nikkei rose 2.4 per cent and MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 per cent.

Investors see a roughly 24 per cent chance of a Fed rate increase this month, down from 64 per cent a week ago, according to CME FedWatch data, though a move in December remains largely priced in.

Oil prices fell on Monday after crude exports from the Middle East increased and the Group of Seven nations pledged to boost supplies, though selling was limited by ongoing disruption fears linked to the US-Israeli war on Iran.

Brent crude futures settled $1.93, or 1.89 per cent, lower at $100.32 a barrel, while US West Texas Intermediate crude lost $1.68, or 1.84 per cent, at $89.43.

Spot gold was steady at $4,143 an ounce.

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