Havens Rally as Risk Events Stack Up; Oil Swings: Markets Wrap: Bloomberg

  • Yen climbs to highest in a month, gold extends advance 3rd day
  • European bonds climb; stocks decline as Roche slumps

Caution reigned across markets in a week loaded with risk events, from former FBI chief James Comey’s congressional testimony to the ECB’s policy meeting and Britain’s increasingly uncertain election. Havens including gold, the yen and Treasuries gained while stocks retreated.

Gold and the yen both rose to the strongest in more than a month, and 10-year Treasury yields fell to near the lowest since November. The dollar traded at an eight-month low and U.S. stock futures slipped. Europe’s benchmark share index dropped the most in a week led by Swiss pharmaceutical company Roche Holding AG after one of its drug studies disappointed. Miners were among the biggest losers again as Bloomberg’s commodities index declined a sixth day.

With all three major events — Comey, the ECB meet and British election — on Thursday, investors’ risk-off mood this week is understandable. It’s been compounded by a diplomatic spat among energy producing nations in the Middle East and a terror attack in London.

“There is not much scheduled today that could potentially inspire the markets as the main focus this week is on ‘Super Thursday,”’ Piotr Matys, a London-based currency strategist at Rabobank, wrote in a client note. “Essentially, we brace for a volatile session on Thursday and Friday as at least one of those crucial events could trigger sharp moves in the markets.”

Read our Markets Live blog here.

Here are details on some of the important coming events:

  • The European Central Bank’s policy decision probably won’t surprise, but the bank may drop the reference to “downside” risks to growth, while reiterating a weak inflation outlook. As a bonus, you get Mario Draghi speaking afterwards.
  • Will she, won’t she? Voters will decide on Thursday whether U.K. Prime Minister Theresa May will extend her majority. Or lose it completely.
  • Comey’s testimony will be parsed for clues to how the probe into the Trump campaign’s contact with Russian officials could impact the administration.
  • The EIA releases its short-term energy outlook today.

Here are the main moves in markets:

Asia

  • Japan’s Topix index fell 0.8 percent after the yen strengthened. Australia’s S&P/ASX 200 tumbled 1.5 percent, the most in more than two months and reaching the lowest since February.
  • The Aussie dollar swung between gains and losses after the central bank left its benchmark interest rate unchanged.

Currencies

  • The yen rose 0.7 percent to 109.70 per dollar as of 10:07 a.m. in London, reaching the strongest level since April 21.
  • The Bloomberg Dollar Spot Index fell 0.1 percent, trading at the lowest since October.
  • The euro was little changed at $1.1254 and the British pound rose 0.2 percent to $1.2923.
  • The Mexican peso retreated 0.2 percent after jumping 1.8 percent on Monday. President Enrique Pena Nieto’s party forged ahead in the election for governor of Mexico’s largest state.

Stocks

  • The Stoxx Europe 600 Index declined 0.4 percent and the FTSE 100 fell 0.2 percent.
  • Futures on the S&P 500 Index dropped 0.1 percent after the underlying gauge slid 0.1 percent Monday.
  • Qatari stocks steadied after plunging the most since 2009 on Monday. Saudi Arabia and three other Arab countries severed most diplomatic and economic ties to the country.

Commodities

  • Gold climbed 0.7 percent to $1,289.04 an ounce, advancing for a third day to the highest since April 18.
  • WTI crude edged lower by 0.2 percent to $47.33 a barrel, after dropping as much as 1 percent and rising as much as 0.7 percent earlier.

Bonds

  • The yield on 10-year Treasuries declined three basis points to 2.16 percent, after climbing two basis points in the previous session.
  • Ten-year yields in France fell three basis points while those in Germany and the U.K. dropped two basis points.

Source: Bloomberg

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