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GLOBAL MARKETS-Stocks rise with focus on stimulus; U.S. yield curve briefly inverts

Published 21/08/2019, 21:52
© Reuters.  GLOBAL MARKETS-Stocks rise with focus on stimulus; U.S. yield curve briefly inverts
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* Next: Powell's Jackson Hole speech on Friday

* Renault , Fiat tie-up hopes boost shares

(Updates to U.S. market close)

By Rodrigo Campos

NEW YORK, Aug 21 (Reuters) - A global equities gauge rose on

Wednesday for a third day in four as bets on more economic

stimulus overcame, for now, worries over the rising prospect of

a global recession.

The brief inversion of the curve between 2-year and 10-year

U.S. Treasury yields loomed, however, as it is seen as a

harbinger for an economic contraction. The curve has at some

point inverted in four of the past six sessions. US/

Strong earnings in the United States and the report of talks

on a megamerger in European autos triggered gains in stocks, and

the improved risk sentiment drove safe-haven yields higher while

the yen and gold edged lower.

There was muted reaction across markets to minutes from the

Federal Reserve's meeting late last month. Policymakers debated

lowering interest rates more aggressively than the quarter-point

cut last month, while showing broad concern over a global

economic slowdown and trade tensions. The trade war escalated further after that Fed meeting, and

investors were cautious about the current validity of

policymakers' comments.

"It's really old news. This is from the July meeting and

what (Fed Chairman Jerome) Powell has to say on Friday is going

to be much, much more important than these minutes," said Mary

Ann Hurley, vice president in fixed-income trading at D.A.

Davidson in Seattle.

Traders expect that the Fed's annual Jackson Hole, Wyoming,

symposium and a Group of Seven summit this weekend will shed

light on the next steps policymakers will take to support

economic growth.

Auto shares .SXAP led European stocks higher after Italian

media suggested the merger talks between Fiat Chrysler FCHA.MI

and Renault RENA.PA have continued despite reports to the

contrary. In U.S. equities, earnings from Target (NYSE:TGT) and Lowe's boosted

consumer-centered stocks and overall market sentiment.

"As long as we have the healthy environment in jobs that we

have right now, it's going to be very difficult to shake

people's confidence," said JJ Kinahan, chief market strategist

at TD Ameritrade in Chicago. "At the end of the day, if people

are employed, they're going to go out and spend some money."

The Dow Jones Industrial Average .DJI rose 240.29 points,

or 0.93%, to 26,202.73, the S&P 500 .SPX gained 23.92 points,

or 0.82%, to 2,924.43 and the Nasdaq Composite .IXIC added

71.65 points, or 0.90%, to 8,020.21. The pan-European STOXX 600 index .STOXX rose 1.21% and

MSCI's gauge of stocks across the globe .MIWD00000PUS gained

0.70%. Emerging market stocks rose 0.31%. MSCI's broadest index of

Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.16%

lower, while Japan's Nikkei .N225 lost 0.28%. RISE, YEN FALLS

Futures markets have fully priced a 25-basis-point cut in

next month's Fed meeting. On Wednesday, U.S. Treasury yields

rose as rising stock prices reflected improving risk sentiment.

Benchmark 10-year notes US10YT=RR last fell 9/32 in price

to yield 1.5893%, from 1.559% late on Tuesday. Germany sold 30-year bonds with a negative yield for the

first time at an auction on Wednesday, a milestone for a

fixed-income market where the entire curve now yields less than

zero. The very weak demand seen at the auction was

expected. West Texas crude futures fell after U.S. government data

showed a drawdown in domestic crude stockpiles but rises in

refined product inventories, while worries about a possible

global recession capped gains in Brent.

U.S. crude CLc1 fell 0.32% to $55.95 per barrel and Brent

LCOc1 was last at $60.40, up 0.62% on the day. In currencies, the dollar rose against the Swiss and

Japanese safe-haven currencies and the dollar index .DXY rose

0.12%, with the euro EUR= down 0.14% at $1.1083. Sterling

GBP= was last trading at $1.2123, down 0.37% on the day.

The Japanese yen JPY= weakened 0.37% versus the greenback

to 106.63 per dollar.

Spot gold XAU= dropped 0.3% to $1,502.15 an ounce.

Global assets in 2019 http://tmsnrt.rs/2jvdmXl

Global currencies vs. dollar http://tmsnrt.rs/2egbfVh

Emerging markets in 2019 http://tmsnrt.rs/2ihRugV

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