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Global Markets: Oil rises further as stocks mixed amid Italy crisis, U.S. ADP jobs data

US President Donald Trump

New York, Oct 3 , 2018

Stock markets around the world were mixed on Wednesday amid signs that Rome would cut budget deficits and decrease its debt in the coming years.

Meanwhile, U.S. Treasuries yields hit multi-year highs and the dollar firmed as data pointed to another Federal Reserve rate hike.

In oil, Brent crude rose to a four-year high as the market focused on upcoming U.S. sanctions on Iran.

Brent rose to 86.29 dollars.

U.S. crude rose 1.57 per cent to 76.41 per barrel.

On Wall Street, strong early gains, including a record high in the Dow, were whittled down in afternoon trade. Financial stocks gained from a rebound in European markets.

The Dow Jones Industrial Average rose 48.34 points, or 0.18 perncent, to 26,822.28, the S&P 500 gained 1.15 points, or 0.04 per cent, to 2,924.58.

Nasdaq Composite added 23.01 points, or 0.29 per cent, to 8,022.55.

MSCI’s gauge of stocks across the globe lost 0.13 per cent.

U.S. Treasury yields reached multiyear peaks, with the 10-year note’s yield at its highest since 2014 and maturities at the short end of the curve at decade highs.

Benchmark 10-year notes last fell 26/32 in price to yield 3.1512 per cent. The 30-year bond last fell 58/32 in price to yield 3.306 per cent.

The yield on the benchmark 10-year note was on track for its largest daily jump since the U.S. presidential election in November 2016.

U.S. service sector activity hit a 21-year high and the ADP private payrolls data for September came in stronger than expected.

“This is a bigger reaction to economic data than anything we’ve seen lately,” said Gene Tannuzzo, senior portfolio manager at Columbia Threadneedle Investments.

The U.S. dollar also gained after the release of the ADP data, which comes ahead of the more comprehensive non-farm payrolls data on Friday.

Stock markets around the world initially rose after a report in the Corriere della Serra newspaper – later confirmed to mefia by a government source – said Italy’s deficit would fall to 2.2 per cent of gross domestic product in 2020.

Italian 10-year borrowing costs eased off 4-1/2-year highs , after jumping 50 basis points since budget details emerged last Thursday. Two-year yields fell 10 bps.

The improved mood toward Italy also reduced the premium investors demand for holding Italian risk relative to that of safer Germany to around 290 bps.

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