Oil jumps after Russia sanctions; stocks, US yields inch higher

By Caroline Valetkevitch and Amanda Cooper

NEW YORK/LONDON (Reuters) -Oil prices surged about 5% on Thursday after Washington imposed sanctions on major Russian companies over the Ukraine war, while major stock indexes edged higher as gains in U.S. and European energy shares helped to offset some lackluster earnings news.

The sanctions, announced late Wednesday, were placed on major Russian suppliers Rosneft and Lukoil. The U.S. said it was prepared to take further action as it called on Moscow to agree immediately to a ceasefire in Ukraine.

Wall Street indexes were higher, with energy leading sector gains on the S&P 500 index. The energy sector was last up 1.2%.

A clutch of positive earnings reports also helped to support stocks. However, market pressure came as International Business Machines shares fell 3.7% after the company recorded a slowdown in growth in its key cloud software segment.

Also, shares of Tesla were down 2.5% after the electric vehicle maker late Wednesday extended its streak of profit misses to a fourth quarter.

“In general, the (stock) market is responding to earnings, which for the most part continue to be good. And the other factor is that Trump placed severe sanctions on major Russian oil companies, which is being applauded by the market. You can see that in the energy sector,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

The Dow Jones Industrial Average rose 15.86 points, or 0.03%, to 46,606.27. The S&P 500 climbed 20.19 points, or 0.30%, to 6,719.59 and the Nasdaq Composite advanced 111.44 points, or 0.49%, to 22,851.83.

MSCI’s gauge of stocks across the globe rose 2.24 points, or 0.23%, to 993.01.

The pan-European STOXX 600 index rose 0.35%.

Chinese stocks closed up 0.3%, having recovered from a 1.1% drop after sources said the White House was considering a plan to curb an array of software-powered exports to China in retaliation against Beijing’s latest round of rare earth export restrictions.

Oil futures were in focus after the latest Russia sanctions news. European Union countries also approved a 19th package of sanctions on Moscow that included a ban on Russian liquefied natural gas imports, while Britain hit Rosneft and Lukoil with sanctions last week.

U.S. crude was last up 5.2% at $61.54 a barrel and Brent was at $65.65 per barrel, up 4.89% on the day.

U.S. Treasury yields also rose following the sanctions news, while investors braced for a key reading on U.S. inflation on Friday.

The benchmark U.S. 10-year Treasury note yield rose 3.3 basis points to 3.986% after hitting a session high of 3.997%.

The geopolitical risks renewed demand for safe-haven gold, which had fallen earlier this week after its recent strong rally. Spot gold rose 1.28% to $4,146.01 an ounce.

Helping to offset some of the angst over geopolitical flashpoints and trade tensions is the firm belief among investors that the Federal Reserve will continue to cut U.S. interest rates.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.05% to 98.98. The index has been edging higher in recent months as investors have become more confident the Fed will act to protect the economy.

(Additional reporting by Gregor Stuart Hunter in Singapore; Editing by Kim Coghill, Jacqueline Wong, Joe Bavier and Richard Chang)