Stocks Pare Gains; Bond Yields Rise: Markets Wrap

• Treasuries follow bunds lower as Germany seen mulling stimulus
• Pound strengthens even as PM Johnson plans to close Parliament

 

U.S. stocks pared gains as health care, utilities and consumer staples moved lower. Sovereign bond yields rose in the North America and Europe.

The three main U.S. stock gauges had all began the day in the green, with AT&T leaping after activist investor Elliott Management outlined a “value-creation” opportunity in a letter to its board. Boeing weighed on the Dow Jones Industrial Average, after the company suspended testing of its 777X aircraft Saturday following a cargo door failure.

A dollar gauge continued slipping from Friday, when Federal Reserve Chairman Jerome Powell stoked expectations of another interest-rate cut at his next policy meeting. Chinese authorities took several steps to ease financing conditions in the past few days.

The Stoxx Europe 600 Index swung between modest losses and gains and euro-area bonds fell as investors showed less conviction that the European Central Bank’s policy meeting Thursday will result in bold steps toward easier policy, and after German exports showed a surprise increase. The pound climbed after the U.K. economy grew surprisingly fast in July, holding gains even after an announcement that Parliament will be suspended at the end of Monday’s business. Central banks are striding back into the spotlight as protectionist moves between the two biggest economies cast shadows across the global growth outlook. More high-level Sino-U.S. trade talks are not expected until next month. Traders have been kept somewhat on edge after data over the weekend showed China’s exports unexpectedly contracted in August, and last week’s U.S. employment report was weaker than many forecast.

“There has been a tremendous rally in bonds and the central banks are the key determinant of what’s going to happen with the rates market,” Frances Hudson, global thematic strategist for multi-asset investing at Aberdeen Standard Investments, told Bloomberg TV. “With equities there is still an element of self-determination.”

Elsewhere, oil advanced after Saudi Arabia’s new energy minister signaled that OPEC and its allies will continue with production cuts, as the group prepares to gather in Abu Dhabi. A benchmark for emerging-market shares climbed for a fourth straight session, putting it on track for the highest close in five weeks.

Here are some key events coming up this week:

• The U.K. Parliament said to be suspended later Monday, and a bill blocking a no-deal Brexit could become law.
• OPEC’s monthly oil market report, which includes demand forecasts and production estimates, is due Wednesday.
• The ECB policy meeting Thursday is widely expected to see a cut to interest rates and a review of all options, including QE. Policy makers will also publish forecasts for growth and inflation. ECB President Mario Draghi will hold a press conference.

These are the main moves in markets:

— With assistance by Todd White