Stocks Ease Back as Dollar Rebounds; Oil Steadies: Markets Wrap: Bloomberg

  • Treasuries decline and European bonds are mixed; gold slips
  • Euro and yen drop; U.S. equity futures point to higher open

European stocks followed many of their Asian peers lower as the earnings season got into full swing, while the U.S. dollar rose and West Texas oil steadied after Tuesday’s drop. Gold slipped for a second day.

The Stoxx Europe 600 Index retreated, finding little support from the weaker euro following declines in a number of Asian markets and a pullback in U.S. equities yesterday. Chinese shares bucked the trend, climbing to a fresh record in Hong Kong. The yen and pound were among the other major currencies falling against the greenback. Treasuries declined amid Congressional talks to avert a government shutdown Friday.

Traders appear to be taking a pause, perhaps questioning the pace of gains in equity markets at the start of 2018. After sales updates from many retailers, the earnings season is ramping up, with money managers eager for good news to help maintain the rally. Meanwhile bond investors are mulling the potential for monetary policy in the U.S. to tighten faster than expected, and settling their nerves after last week’s selloff. The notion of a bear market doesn’t seem to have endured — the yield curve steepening barely lasted a day.

“It’s more of a healthy correction” in stocks, said Hartmut Issel, the head of Asia Pacific equity and credit at UBS AG Wealth Management in Singapore. “The last two and a half weeks have been very strong and in some cases we were really wondering if you extrapolate this another three or four weeks we would have exhausted the potential we saw for the entire year.”

Elsewhere, West Texas oil slipped before U.S. government data forecast to show crude stockpiles fell for a ninth week. Bitcoin steadied after Tuesday’s plunge.

Terminal users can read more in our markets blog.

Here’s what to watch out for this week:

  • Taiwan Semiconductor Manufacturing Co., Bank of America Corp. and Goldman Sachs Group Inc. are among notable earnings releases on the cards.
  • Industrial production in the U.S. probably increased in December, a report may show Wednesday, completing a solid year for manufacturing.
  • U.S. housing starts probably slipped in December for the first time in three months as frigid winter weather impeded work, forecasts show ahead of Thursday’s release.
  • The Bank of Canada’s interest-rate decision comes Wednesday. Monetary policy announcements are also this week due in South Korea, South Africa and Turkey.
  • China releases fourth quarter GDP, December industrial production and retail sales Thursday.

And these are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index dipped 0.3 percent as of 9:37 a.m. London time.
  • The MSCI All-Country World Index fell 0.1 percent.
  • The U.K.’s FTSE 100 Index sank 0.3 percent to the lowest in more than a week on the largest decrease in more than a week.
  • Germany’s DAX Index dipped 0.2 percent.
  • The MSCI Emerging Market Index gained less than 0.05 percent to the highest in almost 10 years.
  • Futures on the S&P 500 Index climbed 0.2 percent.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2 percent, the first advance in more than a week.
  • The euro declined 0.2 percent to $1.2235, the biggest drop in more than a week.
  • The British pound declined less than 0.05 percent to $1.3787, the largest fall in a week.
  • The Japanese yen sank 0.3 percent to 110.77 per dollar, the first retreat in more than a week.

Bonds

  • The yield on 10-year Treasuries gained two basis points to 2.56 percent, the highest in a week.
  • Germany’s 10-year yield fell one basis point to 0.55 percent.
  • Britain’s 10-year yield fell one basis point to 1.291 percent, the lowest in a week.

Commodities

  • Gold declined 0.2 percent to $1,335.34 an ounce, the biggest drop in more than a week.
  • West Texas Intermediate crude declined 0.2 percent to $63.59 a barrel, the lowest in a week.

By Cormac Mullen and Samuel Potter

— With assistance by Adam Haigh

Source: Bloomberg

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