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Global Stocks Gain on Hopes for Rate Cut

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07/19/2019 | 07:07am EDT

By Nathan Allan

--Markets in Europe and Asia tick higher

--Brent crude gains amid U.S.-Iran tensions over downed drone

-- Microsoft climbs in offhours trading after posting record revenue

Global stocks rose Friday as investors welcomed comments from a Federal Reserve official that seemed to strengthen the case for an interest-rate cut.

Future contracts tied to the S&P 500 index rose about 0.1%. Shares in Microsoft Corp. were up more than 3% in offhours trading after the world's most valuable public company said late Thursday that its cloud-computing business drove revenue to a record in the most-recent quarter. Its profit also beat expectations.

Friday is poised to be another big day for investors in financial stocks, with State Street and American Express reporting second-quarter results.

U.S. stocks closed higher on Thursday after Federal Reserve Bank of New York President John Williams said central banks must take swift action when faced with adverse economic conditions, which some investors interpreted as signaling a 0.5% rate cut in July. However, the bank later said Mr. Williams didn't intend to signal any specific policy changes. Still, short-term Treasury yields had fallen sharply following those remarks.

The yield on the 10-year Treasury note rose to 2.042% on Friday, while the 2-year note rate, sensitive to shifting expectations for Fed policy, ticked up to 1.785%, according to data from FactSet.

"Given that a 50-basis-point cut would trigger a further rally in global equities, any remark of dovish nature translates immediately into higher asset prices," said Ipek Ozkardeskaya, a senior analyst at London Capital Group.

The WSJ Dollar Index climbed almost 0.3% to 89.89.

Investors will also be watching for University of Michigan's July consumer confidence data. Economists surveyed by The Wall Street Journal forecast the consumer sentiment index logged in at 99.0 in the beginning of July, up slightly from 98.2 at the end of June. Such a rise could reduce the likelihood of a large rate cut by the Federal Reserve at the end of the month and provide some support for the U.S. dollar, Rabobank said.

Meanwhile, global oil benchmark Brent crude rose 1.6%, rebounding from the month's lows and marking a second day of volatility in the prices. Iran denied that the U.S. Navy downed one of its drones in the Strait of Hormuz, following several close encounters between American warships and the Iranian military on Thursday in the vital oil shipping route that have further raised tensions between the nations.

In Europe, the automotive, chemical and food-and-beverage companies were among gainers on the pan-continental Stoxx Europe 600 index, which was mostly flat following a two-day losing streak.

France's Publicis Groupe dropped 8.6% after the advertising giant cut its outlook, prompting a downgrade from analysts at Liberum.

Brewer Anheuser-Busch InBev was among Europe's biggest gainers, rising nearly 5% after the Budweiser maker agreed to sell its Australian subsidiary to Japan's Asahi Group Holdings Ltd. in an $11.3 billion deal in an effort to pare its debt load.

In Asia, most benchmark gauges traded higher. Hong Kong's Hang Seng Index rose more than 1%, buoyed by consumer-goods companies.Japan's Nikkei 225 index climbed 2%.

-- Lauren Almeida contributed to this article

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 0.96% 26135.79 Delayed Quote.12.04%
HANG SENG -0.09% 26257.38 Real-time Quote.1.69%
NASDAQ 100 1.52% 7719.323313 Delayed Quote.20.13%
NASDAQ COMP. 1.35% 8002.812313 Delayed Quote.19.00%
NIKKEI 225 0.55% 20677.22 Real-time Quote.2.02%
S&P 500 1.21% 2923.65 Delayed Quote.15.23%
US DOLLAR INDEX 0.21% 98.35 End-of-day quote.1.72%
WTI -0.21% 56.01 Delayed Quote.20.64%
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