Stocks Extend Gain on Growth Outlook; Dollar Slips: Markets Wrap: Bloomberg

  • Concerns over trade on backburner after strong U.S. jobs data
  • Treasuries dip amid risk-on mood; euro, pound strengthen

U.S. equity futures and European stocks advanced on Monday, tracking peers in Asia as optimism over the world’s largest economy helped investors put protectionist fears to one side. Treasuries edged lower, the dollar fell, and the pound and euro rose.

The Stoxx Europe 600 Index climbed as almost every industry group traded in the green, with utility companies leading the way. S&P 500 contracts pointed to the U.S. benchmark extending Friday’s advance, while the MSCI Asia Pacific Index surged even as China warned it will withdraw from commitments it made on trade if President Donald Trump carries out a separate threat to impose tariffs on the Asian country. The dollar pulled back after completing a seventh week of gains. The 10-year Treasury yields traded above 2.90 percent.

Investors are in a broad risk-on mood after impressive U.S. jobs data on Friday, which provided an upbeat end to a week that was otherwise dominated by the threat of another euro-area crisis. Much of that concern seems to have dissipated after nationalist parties finally took power in Italy, ending months of deadlock, while the Socialist led-opposition in Spain ousted Prime Minister Mariano Rajoy with a no-confidence vote Friday.

Attention may yet turn back to trade, however. G-7 leaders meet in Quebec later this week, with the European Union and Canada threatening retaliatory measures unless Trump reverses course on new steel and aluminum levies.

“There is a lot of to-ing and fro-ing which so far hasn’t led to the imposition of some of these threatened tariffs, but I think the tit-for-tat and the possibility that this will start to gain unwanted momentum is very important to the markets,” John Wraith, head of U.K. macro rates strategy at UBS Group AG, told Bloomberg Television. “That said, it’s somewhat of a slow burner, it takes time to have an impact and issues like the situation on the Korean Peninsula and recently the Italian political situation, they have more immediate impact.”

Elsewhere, emerging-market stocks jumped and their currencies rose. West Texas Intermediate crude declined amid speculation OPEC may phase out supply cuts at a time when American shale continues to surge.

Terminal users can read more in Bloomberg’s Markets Live blog.

These are some key events to watch this week:

  • Apple Worldwide Developers Conference in San Jose, California, kicks off Monday. The company is expected to unveil projects such as new versions of iPhone and Mac operating systems.
  • Reserve Bank of Australia monetary policy decision is out Tuesday.
  • Tesla holds its annual shareholder meeting also Tuesday.
  • U.S. ISM non-manufacturing index out Tuesday. Growth at U.S. service industries probably improved in May for the first time in four months, indicating the economy is strengthening after a first-quarter slowdown, economists forecast.
  • Reserve Bank of India rate decision on Wednesday.
  • U.S. trade balance and Australia GDP also out on Wednesday.
  • On Thursday, Japanese Prime Minister Shinzo Abe meets with U.S. President Trump at the White House to discuss the planned U.S. summit with North Korea’s Kim Jong Un.
  • Also on Thursday, euro-zone GDP.
  • Turkey rate decision is due on Thursday.
  • G-7 Leaders’ Summit starts in Quebec Friday through to June 9.

These are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index increased 0.5 percent as of 6:54 a.m. New York time, the highest in a week.
  • The MSCI World Index of developed countries climbed 0.5 percent to the highest in more than a week.
  • The MSCI Asia Pacific Index increased 1.4 percent to the highest in almost three weeks on the largest climb in 12 weeks.
  • Japan’s Nikkei 225 Stock Average gained 1.4 percent to the highest in a week on the biggest rise in almost seven weeks.
  • The MSCI Emerging Market Index increased 1.2 percent to the highest in more than two weeks on the largest climb in 12 weeks.
  • The U.K.’s FTSE 100 Index rose 0.9 percent to the highest in more than a week on the biggest advance in two weeks.
  • Futures on the S&P 500 Index rose 0.4 percent to the highest in more than 11 weeks.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.4 percent to the lowest in more than a week.
  • The euro gained 0.6 percent to $1.1725, the strongest in almost two weeks.
  • The British pound climbed 0.2 percent to $1.3378, the strongest in more than a week.
  • The Japanese yen was unchanged at 109.54 per dollar, the strongest in more than a week.

Bonds

  • The yield on 10-year Treasuries climbed one basis point to 2.91 percent, the highest in a week.
  • Germany’s 10-year yield increased two basis points to 0.41 percent, the highest in more than a week.
  • Britain’s 10-year yield climbed two basis points to 1.296 percent, the highest in a week.

Commodities

  • West Texas Intermediate crude dipped 0.6 percent to $65.42 a barrel, the lowest in almost eight weeks.
  • Gold rose 0.1 percent to $1,294.95 an ounce.

By June 4, 2018, 9:00 PM GMT+10

— With assistance by Andreea Papuc, and Srinivasan Sivabalan

Source: Bloomberg

 

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