NEW YORK/LONDON - Stocks rallied globally on Friday after a run of strong U.S. corporate earnings reports fuelled optimism about the economy, though higher oil prices kept inflation risks alive and supported government bond yields.
U.S. investment bank Goldman Sachs Group Inc was the latest on Wall Street to trounce market expectations when it reported a 66% surge in third-quarter profit, thanks to a record wave of investment banking activity.
The Dow Jones Industrial Average rose 0.83%, the S&P 500 gained 0.65%, and the Nasdaq Composite added 0.49%.
The pan-European STOXX 600 index rose 0.71% and MSCI's gauge of stocks across the globe gained 0.81%.
"The overall mood is buy the bid; there is no alternative to equities. We have come out with this enthusiasm about earnings coming back and optimism coming through," said Kit Juckes, global fixed income strategist at SocGen.
Britain's FTSE 100 gained 0.27%, with the UK blue-chip index recovering all ground lost since the coronavirus pandemic began in March last year, but analysts warned over complacency in markets.
"Markets have been trying to make up their mind on whether inflation is transitory, are supply chain disruptions are going to translate into higher costs," said Mike Hewson, chief markets analyst at CMC Markets.
"But this week's earnings from various companies are assuaging some of those concerns that companies won't be able to pass on some of these cost rises to consumers, and that's why we are seeing the increase in risk," Hewson said.
The return of optimism will be tested by next week's anticipated weaker growth data from China and the impact of strengthening oil prices on consumers going into the winter months, Hewson said.
European car registrations slumped by more than a quarter in September, and Toyota Motor Corp said it would cut global output in November as chip shortages and supply chain problems continued to dog the sector.
BRENT AND BITCOIN
Oil prices were at multi-year highs, a drag on growth in energy-importing markets in north Asia, but good news for some energy-exporting markets in Southeast Asia.
U.S. crude jumped 1.03% to $82.15 per barrel and Brent rose 0.83% to $84.70.
Bets that rising prices are likely to prompt the Federal Reserve to raise interest rates sooner than expected once again dragged on the yen, which is sensitive to rate differentials.
The dollar touched a three-year high versus the yen JPY= with one dollar buying 114.46 yen, the most since late 2018.
The dollar index, which measures the greenback against a basket of other currencies, was marginally lower on the day, shedding 0.119%, and set for its first weekly decline versus major peers since the start of last month, having lost a little ground to sterling and the euro.
The yield on two-year U.S. Treasuries, which reflect short-term rate expectations, climbed to 0.3788%, from Thursday's 0.354%.
Bitcoin hit a six-month high of $60,000 on Friday, approaching the record hit in April, as traders became increasingly confident U.S. regulators would approve the launch of an exchange-traded fund based on its futures contracts.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.35%, rising 2.1% for the week in its best weekly performance since late June, while Japan's Nikkei surged 1.81%, led by tech stocks.
Analysts largely attributed the gains in Asia to the U.S. rally.
Chinese shares rose more cautiously than elsewhere with blue chips up 0.38% ahead of next week's growth figures.
A Chinese central bank official said on Friday that the spillover effect of China Evergrande Group's debt problems on the banking system is controllable, in rare official remarks on the liquidity crisis at China's No. 2 developer that has roiled markets.
(Reporting by Huw Jones, additional reporting by Alun John; Editing by Susan Fenton, Kirsten Donovan and Steve Orlofsky) ((firstname.lastname@example.org;))