World shares advance as oil falls, bond yields retreat

World stocks scaled two-week highs on Tuesday as easing oil prices and bond yields helped steady sentiment, while investors looked ahead to an earnings season expected to be powered by continued AI-driven growth. Futures pointed to a record-high open for the S&P 500 for the first time since mid-August, while the tech-heavy Nasdaq was on track for a third consecutive all-time high. The pan-European STOXX 600 firmed 0.6%. MSCI's gauge of stocks across the globe rose 0.2%. 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 0.2% to 1.1239, 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 fell 15.3 basis points to 4.708% after surging to its highest since the 2000s last week. Far-right leader Marine Le Pen, the frontrunner in next spring's presidential election, increased 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 1% in premarket trading, putting it on track for a market value of about $5.8 trillion. Other megacap tech companies including Meta Platforms and Alphabet also rose about 0.5%. Brent crude fell 2% to $97.96 a barrel after dropping 1.9% overnight as resilient Middle East crude exports and a G7 emergency stockpile release eased supply concerns, though ongoing security risks in the region limited losses. 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 0.35% to 101.80 after rising 3% over the past month. Traders scaled back expectations of a Federal Reserve rate increase this month to 22% 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 3 bps to 5.2815%, while the 30-year yield dropped 2.8 bps to 5.6356%. Attention remained fixed on France's fiscal outlook. The premium investors demand to hold 10-year French bonds, known as OATs, over safer German debt, known as Bunds, narrowed to 125 bps after widening last week to 158.67 bps, its highest level since the euro zone debt crisis in 2011. France's Finance Minister Roland Lescure said market turbulence had not reached a level warranting ECB intervention. German 10-year bond yields, the euro zone benchmark, dropped 4.6 bps to 3.45%. "Absent a credible catalyst, OAT-Bund spreads are likely to remain in the 130-150 bp range, while partial progress to reduce political uncertainty could bring them towards 120-130 bp," ABN AMRO's senior rates strategist Larissa de Barros Fritz said in a note. Spot gold rose 0.8% to $4,172.97 an ounce.