U.S. Stock Futures Jump With Dollar on Trade Truce: Markets Wrap: Bloomberg

• Mnuchin says U.S. puts trade war against China on hold for now
• WTI oil heading for highest close since 2014; lira slumps

The dollar climbed against most major peers and U.S. equity futures rallied in the wake of news that a trade war between the world’s two largest economies is on pause for now. Treasury yields climbed, and European shares advanced.

The greenback rose as Treasury Secretary Steven Mnuchin said the U.S. was“putting the trade war on hold,” amid progress in talks with China. The euro headed for the lowest level since November after Italy’s two populist parties agreed on a prime minister, while Italian bonds extended their decline. Household goods makers and retailers led advances in the Stoxx Europe 600 Index, though a number of countries are out for a holiday. U.S. oil futures were set to return to the highest level in more than three years after pausing a rally at the end of last week.

“The latest agreement suggests that in the end logic will prevail,” said Athanasios Vamvakidis, Bank of America Merrill Lynch global head of G10 FX strategy, in an interview on Bloomberg Television. “This is good news for the dollar.”

The paring of trade war tensions gives some respite to traders as they grapple with the impact of rising Treasury yields and a stronger dollar. Now they will be keeping a close eye on minutes due to be released from the Federal Reserve’s May meeting, along with preliminary purchasing manager indexes from the euro zone. Meanwhile, geopolitical tensions are still rumbling as South Korea’s president visits Washington to discuss North Korea and Brexit negotiations resume in Brussels.

Elsewhere, emerging-market currencies continued to come under pressure, with Turkey’s lira falling 1.2 percent. Gold dropped to the lowest level this year.

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

These are some key events to watch this week:

• Philadelphia Fed President Patrick Harker, Atlanta Fed President Raphael Bostic and Minneapolis Fed President Neel Kashkari all speak at various events early in the week
• Brexit negotiations resume in Brussels Tuesday, and South Korea’s president visits Washington to discuss North Korea
• Also Tuesday, Facebook founder/CEO Mark Zuckerberg is to be grilled by the European Parliament on his company’s use of personal data
• The Federal Reserve releases minutes of policy makers’ May 1-2 meeting on Wednesday; U.S. new home sale also released as are euro-area and Japan PMIs
• Thursday sees the Bank of England Markets Forum at Bloomberg London. Speakers include BOE Governor Mark Carney and New York Fed President William Dudley
• At the St. Petersburg Forum Friday, Presidents Putin and Emmanuel Macron, IMF Managing Director Christine Lagarde, and Japan Prime Minister Shinzo Abe participate on a panel moderated by Bloomberg News editor-in-chief John Micklethwait
• Also Friday, European Union finance ministers discuss the latest on Brexit talks, in Brussels.

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index rose 0.2 percent as of 10:25 a.m. London time.
• The MSCI All-Country World Index gained less than 0.05 percent.
• Futures on the S&P 500 Index rose 0.6 percent to the highest in a week.
• The U.K.’s FTSE 100 Index climbed 0.5 percent to the highest on record.

Currencies

• The Bloomberg Dollar Spot Index gained 0.2 percent to the highest in more than five months.
• The euro fell 0.3 percent to $1.1738, reaching the weakest in six months on its sixth consecutive decline.
• The British pound fell 0.5 percent to $1.3405, the weakest in almost 21 weeks.
• South Africa’s rand decreased 0.3 percent to 12.8088 per dollar, the weakest in about five months.

Bonds

• The yield on 10-year Treasuries increased two basis points to 3.07 percent.
• Britain’s 10-year yield gained less than one basis point to 1.5 percent.
• France’s 10-year yield fell one basis point to 0.827 percent, the lowest in more than a week.
• Germany’s 10-year yield dipped two basis points to 0.56 percent, the lowest in more than a week.

Commodities

• West Texas Intermediate crude rose 0.4 percent to $71.56 a barrel, the highest in more than three years.
• Gold decreased 0.7 percent to $1,284.56 an ounce, the weakest in almost 21 weeks.
• LME copper rose 0.5 percent to $6,888.00 per metric ton, the highest in more than a week.

By Eddie van der Walt and Cormac Mullen

May 21, 2018, 7:40 PM GMT+10

— With assistance by Ruth Carson, and Andreea Papuc

Source: Bloomberg