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Global stocks hit 2-week high, led by banks ahead of earnings

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The rise in global stocks was led by a rise in bank shares ahead of earnings reports from the main US lenders later.

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Global stocks are at their highest point in two weeks. (Reuters pic)

NEW YORK:
Global stocks hit a two-week high on Monday, led by a rise in bank shares ahead of earnings reports from the main US lenders later in the week, while the pound took a hit after another British cabinet resignation left Prime Minister Theresa May’s Brexit plans in chaos.

The MSCI world equity index, which tracks shares in 47 countries, rose 0.86%. Wall Street notched a third straight day of gains as the market looked past the tit-for-tat trade battle under way between Washington and Beijing.

The S&P 500 Index gained 0.88%, led by a nearly 3% surge in bank stocks, their largest daily rise since March. JPMorgan, Wells Fargo, and Citigroup are all due to report quarterly results on Friday.

The Dow Jones Industrial Average rose 320.11 points, or 1.31%, to 24,776.59, while the Nasdaq Composite added 67.81 points, or 0.88%, to 7,756.20.

A pick-up in bond yields also boosted equities.

Overall, S&P 500 profits appear on track for another quarter of year-over-year growth greater than 20%, according to Thomson Reuters estimates. That has helped blunt concerns about the deteriorating global trade scene after the United States and China slapped tariffs on some US$34 billion (RM137 billion) of each other’s goods on Friday.

“The market is anticipating a very good earnings season and ignoring any trade issues,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Bank shares also found support from the first notable uptick in US Treasury yields in two weeks. The yield on the 10-year note rose 3 basis points to nearly 2.86%.

European and Asian stocks also rose, with the pan-European STOXX 600 index gaining 0.58%, led by a strong bounce across mining and energy stocks.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.35%, following a 0.7% rally on Friday when the launch of U.S. tariffs on Chinese imports came and went without too much of an effect.

The pound lost ground after Foreign Minister Boris Johnson added his name to the clutch of British cabinet ministers to quit in protest over Prime Minister Theresa May’s plan for leaving the European Union.

The pound had been damaged by the two other ministerial departures, including Brexit Minister David Davis on Sunday, but Johnson’s announcement accelerated the decline, calling into question May’s ability to deliver the vision of continued close ties with the European Union that she said they had agreed to last week.

The pound dove more than 1% at one point before partially recovering to stand 0.29% below Friday’s close.

The UK’s FTSE gained 0.92%, helped by the currency’s weakness, although analysts said the political tensions were no positive for stocks in the longer term.

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