Aug 4 : European stocks climbed alongside U.S. futures on Tuesday, although a rebound in oil prices underscored market scepticism that the U.S.-Iran war would be resolved quickly through diplomacy.Meanwhile the yen eased slightly, but held on to most of its intervention-driven gains after last week's joint action by Tokyo and Washington to support the currency.Conflicting signals from the U.S. and Iran boosted uncertainty, with the latest attack on shipping in the Strait of Hormuz highlighting risks to global energy flows.Brent futures rose 1.4 per cent to $84.95 a barrel after dropping 7 per cent in the previous session to a three-week low.
Europe's STOXX 600 .STOXX was up 0.55 per cent, with tech stocks rising 1.7 per cent.Nasdaq futures climbed 0.67 per cent and S&P 500 futures increased 0.22 per cent. The S&P 500 index <.SPX> jumped 1.48 per cent on Monday hitting 7,610.04, not far from its all-time high of 7,620.90, while the Dow Industrials reached a closing record high.MSCI's main world stocks index <.MIWD00000PUS> rose 0.05 per cent. Japan's Nikkei <.N225> gained 0.32 per cent."We are adding risk to sectors which should be less impacted by higher rates. Tech and financials would be our favourite sectors to add back risk in the portfolio," Mohit Kumar, an economist at Jefferies, said, recalling the recent rally in bond yields."One underlying factor that continues to support our medium term bullish view is the amount of cash in the system," he added.Longer-dated U.S. Treasury yields rose to a 19-year high last week after comments from U.S. Federal Reserve Chairman Kevin Warsh raised concerns the Fed may not act aggressively to head off inflation.Market participants believe Warsh does not want to hike, and the incoming data could provide him enough cover to stay put. The first round of U.S. jobs data is due later on Tuesday.With almost two-thirds of S&P 500 companies reporting for the second quarter, 84 per cent have beaten earnings estimates, according to LSEG data and market participants ."The AI capex boom remains intact," Eastspring Investments analysts, including Chief Investment Officer Vis Nayar, wrote in a note.However, concerns linger elsewhere for Europe, with some economists warning that its economy faces a more challenging outlook than other regions as drought hampers Rhine shipping and gas inventories remain under pressure.YEN RALLY STALLSAgainst the yen, the dollar was up 0.4 per cent at 157.80 yen, rebuilding strength after coordinated intervention by U.S. and Japanese authorities to prop up the yen last week.The Japanese currency remains about 4 per cent stronger against the greenback compared with the levels a week ago that prompted official support and marked the first U.S. intervention in the Japanese foreign exchange market in 15 years.However, market participants worried that Japan's expansionary fiscal policy and the Bank of Japan's gradual pace of rate hikes could weigh on the yen."The catalysts that can amplify the unwinding of short yen positions (supporting the currency) are, potentially, lower crude oil prices, BoJ policy tightening in September and thereafter, and some moderation in prime minister Sanae Takaichi's fiscal plans, in order to bring debt sustainability back," Thierry Wizman, global forex and rates strategist at Macquarie Group, said.The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, was trading steady not far from the lowest levels of the past two months at 99.98.
