US stocks advance with Treasuries on trade hopes

Traders hold onto hopes for an easing of the trade war and await clues from a meeting of central bankers later this week.

Aug 20, 2018 02:08 IST India Infoline News Service

US stocks edged higher as traders held onto hopes for an easing of the trade war and await clues from a meeting of central bankers later this week. Treasuries climbed.

The S&P 500 Index rose a third day amid bets China and the US will tone down the latest trade rhetoric. Tesla sank after JPMorgan Chase & Co. cut its price target on the stock, and a gauge of semiconductor shares fell for the fifth straight day to the lowest since early July. The 10-year Treasury yield dipped after Jeffrey Gundlach warned of a short squeeze. The dollar was mixed against peers, while the onshore yuan climbed amid signs China is propping up the currency.

“Investors sentiment is on the bullish side, with investors figuring new all-time highs are just around the corner, especially if trade talks get going with China,” Paul Nolte, a portfolio manager at Kingsview Asset Management, wrote in a note to clients. “Another hot late summer week on Wall Street and trading levels should be relatively low. The path of least resistance now is higher, but as we have seen, news flow is important.”

Markets appear to be striking a more optimistic tone after talks between the world’s biggest economies on trade made their way back onto the agenda. Meanwhile, investors will be closely watching this week’s Jackson Hole symposium for clues on monetary policy, and to see whether central bankers can do anything to help bring back stability after the recent bout of emerging market-led volatility.

Elsewhere, the lira slipped for the second day. Turkish markets are closed for most of this week, which may mean low trading volumes and sharper currency swings than usual. Emerging-market stocks and currencies rose. Industrial metals helped push an index of commodity prices higher.

These are the main moves in markets:

Stocks
  • The S&P 500 Index climbed 0.2% as of 10:06 AM in New York
  • The Stoxx Europe 600 Index advanced 0.7%
  • The MSCI All-Country World Index increased 0.3%, touching the highest in more than a week
  • The MSCI Emerging Market Index gained 0.9%

Currencies
  • The Bloomberg Dollar Spot Index was little changed
  • The euro declined 0.1% to $1.1427
  • The Japanese yen rose less than 0.1% to 110.45 per dollar
  • The Turkish lira fell 2.4% to 6.1639 per dollar
  • The MSCI Emerging Markets Currency Index gained 0.3%, the biggest rise in almost four weeks

Bonds
  • The yield on 10-year Treasuries declined two basis points to 2.84%, the lowest in more than a month
  • Germany’s 10-year yield was unchanged at 0.30%
  • Britain’s 10-year yield dipped less than one basis point to 1.23%

Commodities
  • The Bloomberg Commodity Index gained 0.2%
  • West Texas Intermediate crude was little changed at $65.89 a barrel
  • Gold climbed 0.2% to $1,187.07 an ounce

Here are some key events coming up this week:
  • Companies announcing earnings include Alibaba, Royal Bank of Canada, Lowe’s, Target, BHP Billiton, Qantas, Ping An, and China’s Bank of Communications
  • Central bankers to gather at the Kansas City Fed’s annual Jackson Hole symposium on Friday, where Federal Reserve Chairman Jerome Powell speaks. The Fed will release the minutes from latest FOMC meeting on Wednesday

Source: Bloomberg

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