Google helps stock markets recover, oil tops $75

LONDON (Reuters) – World stocks steadied on Tuesday after three sessions of losses thanks to strong earnings from the likes of Google and as a rise in benchmark US bond yields towards 3% stalled, while oil prices stretched to fresh highs above $75 a barrel.

US stock futures pointed to a firm open on Wall Street, although European shares were mixed with stock markets in London and Frankfurt around 0.3% higher and shares in Paris flat.

Markets brushed off further signs that European powerhouse economy Germany is losing some of its momentum, with the Ifo business climate index falling in April.

In Asia, Japan’s Nikkei added 0.9% as a lower yen supported export-heavy firms and Chinese shares posted their strongest gains in two months .

That left MSCI’s world equity index a tad higher after three days of declines.

The recovery in stocks came as bond markets also bounced back from a selloff. US 10-year Treasury yields came within striking distance of the psychologically significant barrier of 3% on Monday, which in the past has triggered market spasms.

“There’s a tug and a pull from all kinds of things in equity markets right now, such as the approach of US bond yields to 3%, but I don’t think that would be the end of the world,” said Lukas Daalder, chief investment officer at Robeco.

Earnings meanwhile, especially from the tech sector, were in focus after a turbulent few months for leading US tech firms.

Google parent Alphabet was up slightly in volatile after-hours trading on Monday after the tech giant reported a 73% jump in profits in the first quarter.

Chipmaker AMS reported first-quarter sales towards the lower end of its guidance range on Monday and warned of a downturn owing to weaker orders from one of its main customers.

AMS did not name the customer, but the Austrian company is a big supplier to Apple, making components for the iPhone.

SAP, Europe’s largest tech company by stock market valuation, meanwhile announced upbeat results in the seasonally tough first quarter.

Of around 18% of the companies in the S&P 500 that have already reported, 78.2% beat consensus estimates.

Brent crude oil prices, the global benchmark, rose above $75 a barrel to their highest level since November 2014, supported by OPEC-led production cuts, strong demand and the prospect of renewed U.S. sanctions on Iran.

US West Texas Intermediate crude futures were 0.5% higher at $69.11 a barrel.

A rally in oil prices and renewed focus on the inflation outlook has added to upward pressure on bond yields recently.

“It is this move higher in crude oil prices, along with the rise in demand, that is helping fuel the recent rise in yields as well as the positive tone for equity markets,” said Michael Hewson, chief market analyst at CMC Markets in London.

“However if it continues too far we could start to see it act as a drag on equity markets, if prices along with yields start to move even higher.”