июн 6, 2017

Dollar Drops With Stocks, Bonds Gain Amid Caution: Markets Wrap

The dollar weakened and equities retreated as investors turned cautious following a seven-week surge for global stocks. Bonds gained with gold while oil fluctuated.

Haven assets were in favor, with the U.S. currency trading at an eight-month low and 10-year Treasury yields near the lowest since November. The yen's strength weighed on Japanese shares, while stocks in Sydney fell to the lowest since February. The Aussie dollar swung between gains and losses after the central bank left its benchmark interest rate unchanged.

With central bank policy makers in the U.S. and Europe all in quiet periods ahead of key policy decisions, attention this week has shifted to Britain's election and testimony from former FBI head James Comey on Thursday. The latest readings on America's economy did little to divert from the view that growth remains intact, with traders now forecasting a more than 90 percent chance of an interest-rate increase next week.

"There's a strong sense of wanting to wait-and-see among investors ahead of former FBI director Comey's testimony and the U.K. elections," said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. in Tokyo. "With both U.S. shares and Japanese shares trading near fresh highs, there's no need to jump on the bandwagon now, ahead of key events."

Here are details on some of the important coming events:

  • The European Central Bank releases its policy decision Thursday. Mario Draghi speaks later that day. Don't expect policy changes, but the bank may drop the reference to "downside" risks to growth, while reiterating a weak inflation outlook, Bloomberg Intelligence said.
  • Surveys of U.K. voters over the past few weeks have indicated a tightening race for Thursday's election, increasing the chance that Prime Minister Theresa May might not bolster her majority.
  • Comey's testimony may offer clues to how the probe into the Trump campaign's contact with Russian officials will impact the administration's ability to push through its policy agenda.

Here are the main moves in markets:

Currencies

  • The yen rose 0.8 percent to 109.63 per dollar as of 8:20 a.m. in London, reaching the highest level since April 25. 
  • The Bloomberg Dollar Spot Index fell 0.1 percent, trading at the lowest since October.
  • The Australian dollar was flat at 74.84 U.S. cents, while the New Zealand dollar rose 0.4 percent. The Reserve Bank of Australia kept its benchmark interest rate unchanged amid a mixed picture of weaker growth signals, a stronger jobs market and a slowing of house prices.
  • The euro was little changed at $1.1256 and the British pound rose less than 0.1 percent to $1.2913.
  • The Mexican peso retreated 0.3 percent after jumping 1.8 percent on Monday. President Enrique Pena Nieto's party forged ahead in the election for governor of Mexico's largest state.

Stocks

  • The Stoxx Europe 600 Index declined 0.3 percent.
  • Japan's Topix index fell 0.8 percent for the biggest decline since May 18. Australia's S&P/ASX 200 Index tumbled 1.5 percent, the most in more than two months and reaching the lowest level since Feb. 9. South Korea was closed for a holiday.
  • Hong Kong's Hang Seng Index rose 0.5 percent while the Shanghai Composite Index added 0.3 percent.
  • Futures on the S&P 500 Index dropped 0.1 percent after the underlying gauge slid 0.1 percent Monday.
  • Qatari stocks rebounded 1.7 percent after plunging the most since 2009 on Monday. Saudi Arabia and three other Arab countries severed most diplomatic and economic ties to Qatar to punish the nation for its links with Iran and Islamist groups.

Commodities

  • Gold climbed 0.7 percent to $1,289.32 an ounce, advancing for a third day to the highest since April 19.
  • WTI crude was little changed at $47.39 a barrel, after dropping as much as 1 percent and rising as much as 0.7 percent earlier. Oil fell 0.6 percent in the previous session as investors shrugged off the political clash in the Gulf.

Bonds

  • The yield on 10-year Treasuries declined two basis points to 2.16 percent, after climbing two basis points in the previous session.
  • Australian benchmark yields dropped two basis points to 2.37 percent.
  • Ten-year yields in France, Germany and the U.K. also fell two basis points.


Bloomberg Markets

by Adam Haigh and Nao Sano