By Caroline Valetkevitch
NEW YORK (Reuters) -Oil prices surged more than 5% on Thursday after Washington imposed sanctions on major Russian companies over the Ukraine war, while major stock indexes climbed 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. 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.
Wall Street stocks rose, with indexes gaining momentum after the White House confirmed U.S. President Donald Trump will meet Chinese President Xi Jinping next week as part of his trip through Asia.
Energy led sector gains on the S&P 500 index, and was last up 1.6%.
A clutch of positive earnings reports also helped to support stocks. Shares of Honeywell gained 7.6% after the company lifted its 2025 profit forecast. However, some market pressure came as International Business Machines shares fell 1.2% after the company recorded a slowdown in growth in its key cloud software segment.
“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 185.84 points, or 0.39%, to 46,774.16, the S&P 500 advanced 47.28 points, or 0.70%, to 6,746.56 and the Nasdaq Composite rose 239.21 points, or 1.05%, to 22,979.60.
MSCI’s gauge of stocks across the globe rose 5.10 points, or 0.51%, to 995.87.
The STOXX 600 index closed at a record high, led by gains in energy stocks. The pan-European STOXX 600 index advanced 0.37% to 574.43 points. Also helping sentiment, shares of Kering jumped 8.7% after the Gucci owner said sales in the previous quarter declined less than analysts had expected.
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. The U.S. said it was prepared to take further action as it called on Moscow to agree immediately to a ceasefire in Ukraine. U.S. crude gained 5.6% to settle at $61.79 a barrel. Brent was at $65.93, last up 5.34%.
U.S. Treasury yields also rose following the sanctions news, while investors braced for a key reading on U.S. inflation on Friday.
The yield on benchmark U.S. 10-year notes rose 4.2 basis points to 3.995% from 3.953% late on Wednesday.
The geopolitical risks renewed demand for safe-haven gold, which had fallen earlier this week after its recent strong rally. Spot gold rose 1.04% to $4,136.34 an ounce.
Helping 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 0.06% to 98.99. The index has been edging higher in recent months as investors have become more confident the Fed will act to protect the economy. The yen slipped to a one-week low. Against the Japanese yen, the dollar strengthened 0.41% to 152.6.
(Additional reporting by Gregor Stuart Hunter in Singapore; Editing by Kim Coghill, Jacqueline Wong, Joe Bavier and Richard Chang)
