By Lawrence Delevingne and Dhara Ranasinghe
BOSTON/LONDON, Oct 9 (Reuters) - World stocks rose on Friday, with government bond yields and oil prices only incrementally higher, ahead of key economic data next week, along with quarterly earnings reports from the largest US banks.
Crude prices ended marginally higher Friday, even after President Donald Trump said that Russia had agreed to immediately supply more than 300,000 tons of diesel to the US and global marketplace. Diesel prices are off records
but still remain well above $6 a gallon in the US.
Front-month West Texas Intermediate oil
All three major U.S. stock indexes advanced, logging weekly gains, with the S&P 500 and technology-heavy Nasdaq Composite both rising about 0.6%.
US and European telecom stocks were among the top decliners on their respective benchmarks on Friday after SpaceX's acquisition of low-band spectrum heightened concerns over growing competition from satellite-based mobile services.
European shares gained 1%, wiping out its weekly fall. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6%, while Japan's Nikkei closed little changed on the day.
The third-quarter earnings season kicks off next week with a number of Wall Street banks set to report, including Goldman Sachs, JP Morgan, Wells Fargo and others.
Doug Beath, global equity strategist at Wells Fargo Investment Institute, said relatively narrow market participation in the S&P 500 suggests investors believe large technology stocks are better positioned to withstand higher oil prices and rising yields, while remaining cautious about other areas of the market.
"A disappointment, particularly in the tech sector, could trigger a pullback, and not just the usual choppy market we've come to expect," he added in an email.
BONDS IN FOCUS
US Treasuries fell on Friday, reversing some of the gains from earlier this week, as investors looked to upcoming inflation reports for clues on what the Federal Reserve will do at its October 27-28 policy meeting.
The benchmark 10-year yield rose 2.8 basis points at 5.261%
In Europe, government borrowing costs were broadly lower after a sharp selloff driven most recently by worries about high inflation and France's fiscal outlook.
The premium investors demand to hold 10-year French debt over German Bunds was trading at about 138 basis points, a slight narrowing over the week.
France has been hit particularly hard by the global bond selloff as investors scrutinize its debt burden, budget deficit and political outlook ahead of the 2027 presidential election.
"We are in a period following the central bank policy meetings and before earnings season, which means that markets are more vulnerable to being whiplashed by day-to-day commentary," said Guy Miller, chief market strategist at Zurich Insurance Group.
A combination of higher energy costs, expectations of further central bank interest-rate hikes and concerns about rising government debt has fueled a months-long global bond selloff, pushing borrowing costs higher.
"With long-term yields back around multi-decade highs, investors no longer have the luxury of valuing AI growth in a low-cost-of-capital world," said Charu Chanana, chief investment strategist at Saxo.
Higher sovereign yields and rising corporate debt issuance to fund AI infrastructure mean capital is becoming "both more expensive and more selective, which puts balance sheets and the quality of future earnings firmly in focus," Chanana said.
CHIPS
Chip stocks slipped 0.4%, a day after selling on concerns about OpenAI. Reuters reported the ChatGPT owner told investors its annualized September revenue was almost $50 billion below earlier signals, although Bloomberg reported the firm could reach or exceed $70 billion by year-end.
"Investors are becoming more discriminating about AI valuations while renewed demand for government bonds is emerging at elevated yields," said Florian Ielpo, head of macro at Lombard Odier.
Investors are anticipating a fresh wave of fundraising from the likes of SpaceX, Broadcom and Oracle, all of whom are expected to raise billions of dollars to buy advanced AI chips.
The euro dropped for a fifth straight week, with gains fading as oil prices recovered from earlier lows. Recent selling pressure eased as France's bond market steadied.
The single currency hit a 17-month low of $1.1161 earlier in the week as investors worried about France's record public debt and the difficult political path to budget cuts, in contrast with the more robust US economy. [FRX/]
Gold rose about 1.5% to $4,193 an ounce, helped by a slightly softer US dollar and lower oil prices.
(Reporting by Lawrence Delevingne in Boston, Dhara Ranasinghe in London and Ankur Banerjee in Singapore; Editing by Emelia Sithole-Matarise, Mark Potter, Chris Reese and David Gaffen)
