Bonds Drop as Stocks Fluctuate Near Record Highs: Markets Wrap

 

 

 

 

 

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index was little changed as of 11:06 a.m. London time.
• Futures on the S&P 500 Index were little changed.
• The U.K.’s FTSE 100 Index climbed 0.2%.
• The MSCI Asia Pacific Index decreased 0.2%.
• The MSCI World Index was little changed.

Currencies

• The Bloomberg Dollar Spot Index declined 0.1%.
• The British pound advanced 0.2% to $1.3102.
• The euro climbed 0.2% to $1.1136.
• The Japanese yen was little changed at 109.53 per dollar.
• The Australian dollar advanced 0.3% to 0.688 per dollar.

Bonds

• The yield on 10-year Treasuries gained two basis points to 1.94%.
• Germany’s 10-year yield advanced three basis points to -0.22%.
• Britain’s 10-year yield advanced four basis points to 0.814%.
• Australia’s 10-year yield jumped six basis points to 1.271%.

Commodities

• West Texas Intermediate crude increased 0.1% to $60.97 a barrel.
• Gold fell 0.1% to $1,474.29 an ounce.
• LME zinc advanced 1.2% to $2,328 per metric ton.

Here are some key events to watch for this week:

• A policy decision is due Thursday from the Bank of England.
• Revised U.S. GDP data are due Friday.
• Friday also brings quadruple witching in the U.S., the simultaneous expiration date of stock index futures, stock index options, stock options and single stock futures. Expect elevated trading volume, particularly in the last hour of the session.

Government bonds fell around the world as more central banks signaled they are done easing policy for now. Stocks fluctuated in Europe while U.S. index futures drifted, leaving equities in major markets lingering close to record highs.

Treasuries slipped with sovereign bonds from London to Tokyo after a host of monetary institutions held the line on loosening policy. Sweden’s central bank even raised its benchmark, ending half a decade of sub-zero interest rates in a move that will provide relief to the finance industry and a test case for global counterparts with negative borrowing costs.

The Stoxx Europe 600 Index was mixed, with gains in oil shares offsetting declines in automakers. Asian shares mostly closed lower. Contracts on the S&P 500 index were steady, seeming to shrug off the impeachment of President Donald Trump Wednesday in the House of Representatives, which also passed two spending bills to avert a partial government shutdown. China said it was in close contact with the U.S. to sign an initial trade deal, and the dollar dipped against its major peers.

There are few new catalysts emerging to revive the equity rally and details of the trade deal remain vague, so traders appear to be in a holding pattern. Central banks are likewise on hold, with policy makers in Japan, Taiwan and Norway leaving interest rates unchanged on Thursday. The Bank of England is forecast to also keep its benchmark steady when it announces a decision later.

“Another day of phase-one trade agreement relief continued to support U.S. and indeed global equities,” said Matt Cairns, a strategist at Rabobank in London. Along with improving economic data and the House spending package “these factors are helping to weigh on Treasuries and bunds as the market ends 2019 with what we believe to be a misguided glass-half-full view of the world,” he said.

Elsewhere, Australia’s dollar climbed after jobs data for November beat forecasts. The pound rose after retreating the past two days amid renewed concern of a possible no-deal Brexit. Bitcoin held its bounce back above $7,000.

Earlier in Asia, equities dipped in Tokyo, Sydney and Hong Kong while they edged higher in Seoul. Stocks in China were unchanged after erasing the day’s losses as its central bank mounted another liquidity injection before a year-end cash squeeze.

 

— With assistance by Sophie Caronello, and Andreea Papuc