GLOBAL MARKETS – Global Equities, US Yields Rise Despite Weak US Economic Growth Data


* US economic growth falls sharply

* S&P 500, Nasdaq record

* Global stocks are on the rise

* US yield curves flatten out

* The ECB leaves its monetary policy unchanged (Updates with the closure of US markets)

By Chibuike Oguh

NEW YORK, Oct.28 (Reuters) – Global stocks hit record highs on Thursday and US Treasury yields rose as investors took into account weak US economic growth data to stay focused on results solid business and interest rate expectations amid rising inflation.

U.S. gross domestic product grew at an annualized rate of 2% in the last quarter, the slowest since the second quarter of 2020, when the economy was beset by restrictions linked to the COVID-19 pandemic, a the Commerce Department said Thursday in its anticipated GDP estimate.

The weak GDP figure was offset by the continued improvement in jobless claims in the United States, which fell from 10,000 to 281,000 seasonally adjusted last week, remaining below the 300,000 threshold for the third week in a row.

“The GDP numbers are not a surprise since we have bottomed out and it will slow down to the normal pre-COVID rate,” said Dan Genter, chief investment officer at RNC Genter Capital Management in Los Angeles.

The three major US stock indexes ended the day’s session higher, with the S&P 500 and Nasdaq posting record closing levels thanks in part to gains from Apple Inc and Amazon Inc. Both companies, however, published reports. results after closing that did not meet expectations.

The MSCI All World Stock Index rose 0.71% to 746.98 points, just below its lifetime high of 749.16 points reached last month.

In Europe, the STOXX index of 600 companies cut past losses and rose 0.24% to 475.16 after the European Central Bank left monetary policy unchanged, as widely expected.

The yield on the 20-year U.S. bond slightly exceeded the yield on the 30-year bond for the first time on Thursday, traders said, a move that is garnering attention due to investor sensitivity to yield curves reversed which can be a harbinger of recession.

Another key yield curve showing the spread between 2-year and 10-year yields was also flatter that day.

The US 10-year benchmark yield was trading at 1.577%.

“With what we’re seeing with the PCE execution rate, there is a feeling at some point that the Fed is going to raise rates,” Genter added.

On Wall Street, the Dow Jones Industrial Average rose 0.68% to 35,730.48, the S&P 500 gained 0.98% to 4,596.42 and the Nasdaq Composite added 1.39% to 15,448, 12.

The US dollar suffered losses against the euro and pound belatedly, as traders digested movements in interest rate markets, comments from ECB President Christine Lagarde and a report US economy weaker than expected.

The dollar index of major currencies lost nearly 0.6% to 93.349, with the euro up 0.67% to $ 1.1682.

Gold prices rose as demand for the safe haven asset was boosted by a weaker dollar and data showing the US economy grew at its slowest pace in over a year.

Spot gold rose 0.11% to $ 1,798.64 an ounce. US gold futures were up 0.2% to $ 1,802.6.

(Reporting by Chibuike Oguh in New York; Editing by Will Dunham and Sonya Hepinstall)

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