GLOBAL MARKETS-World shares advance with oil steady, bond yields in retreat

​World stocks scaled two-week highs on Tuesday as steady oil prices and falling bond yields helped steady sentiment, while investors looked ahead to an earnings season expected to be powered by continued AI-driven growth. The S&P 500 touched a record high for the first ‌time since mid-August, up 0.66% on the day, while the tech-heavy Nasdaq, at 0.6% higher, was on track for a third consecutive all-time high. The Dow Jones Industrial Average rose 0.5%.

The pan-European STOXX 600 gained about 0.5%, and MSCI's gauge of stocks across the globe rose 0.66%. Bond markets found some respite on Tuesday after France's unpopular budget triggered a French debt rout and fuelled ‌fears of broader stress across the euro zone.

The euro rose 0.37% to 1.126, stabilising after hitting a 17-month low in the previous session due to concerns about the euro ‌zone's fiscal outlook. Political uncertainty also deepened after Spain called a snap election on Monday. France's 10-year bond yield dipped to 4.7% after surging to its highest since the 2000s last week. Far-right leader Marine Le Pen, the frontrunner in next spring's presidential election, outlined her plans to slash spending if elected in 2027.

"On the one hand, you've got quite material pressure being felt on the government bond side. But elsewhere the corporate side of ⁠things actually ​don't look too bad. You've got companies whose ⁠earnings remain very robust. We're getting into the earnings season fairly soon, expectations for that are pretty high," said James Klempster, deputy head of multi-asset at Liontrust in London. With few major catalysts on this week's calendar, ⁠investors are increasingly focused on third-quarter earnings, which begin in earnest next week. Goldman Sachs estimates consensus forecasts imply 27% growth in S&P 500 earnings, with more than half that coming from companies benefiting from ​AI infrastructure spending.

Nvidia, the world's most valuable company and a bellwether for the AI trade, rose 0.5%, putting it on track for a market value of nearly $6 trillion. Brent ⁠crude was little changed at about $100 a barrel as resilient Middle East crude exports and a G7 emergency stockpile release eased supply concerns, though ongoing security risks in the region limited losses.

Strategists at PIMCO said in a new ⁠outlook ​that they expect stable global growth to continue while inflation moderates as the energy price shock fades and AI-related demand continues to grow. "The global economy has remained resilient," they wrote.

BOND WORRIES LINGER The dollar weakened broadly against most major currencies, reversing some recent advances as investors pared back their bets on US interest rate hikes following a soft US ⁠jobs report and policymakers' calls for more evidence before further tightening.

The dollar index fell 0.3% after rising 3% over the past month. Traders scaled back expectations of a Federal Reserve rate increase ⁠this month to 19% from about 50% ⁠a week earlier.

Long-dated US Treasury yields also eased after touching fresh 24-year highs on Monday amid a persistent selloff since late August on inflation and debt concerns. The 10-year yield fell 4.4 bps to 5.26%, while the 30-year yield dropped 2.9 bps to 5.63%. Spot gold ‌rose 0.7% to $4,168 an ‌ounce.