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Sydney - A broad-based rally in commodities from oil to copper underpinned gains in producers of raw materials, while the dollar rose and bonds fell as the Federal Reserve prepares to conclude its policy meeting.
Energy shares propelled benchmark equity indices in Europe and Asia, after earnings from Caterpillar and McDonald’s led to outsize gains in the Dow Jones Industrial Average.
Oil rose above $48 a barrel for the first time since early June, while copper extended gains on expectations of increasing demand from China. The Australian dollar declined after inflation data missed estimates.
More than 80% of S&P 500 companies have delivered earnings that have beaten forecasts so far this reporting period, helping to support optimism in the global economy and bringing down volatility levels to fresh record lows.
Investors are looking for clues from the Fed on how it plans to reduce the balance sheet, with policy makers seen keeping interest rates on hold as the US central bank meeting concludes on Wednesday.
Here are some key events coming up:
• Fed policy makers will deliver their rate decision on Wednesday.
• The central bank will unveil the timing of its balance sheet unwind in September and wait until December to raise interest rates again, according to a Bloomberg survey of 41 economists.
• Donald Trump’s son and former Trump campaign chairperson Paul Manafort will go before Senate committees on Wednesday.
• The US economy probably gained traction in the second quarter as spending by American consumers picked up after a lull early this year.
• Results from Facebook, Deutsche Bank, Nomura, BNP Paribas SA and UBS are among those expected this week.
Here are the main moves in markets:
Stocks
• The Stoxx Europe 600 Index rose 0.3% as of 09:15, after climbing 0.4% on Tuesday.
• Japan’s Topix index rose 0.2% and Australia’s S&P/ASX 200 Index added 0.9%.
• South Korea’s Kospi index fell 0.2%, while the Hang Seng Index in Hong Kong gained 0.3%.
• The Shanghai Composite Index added 0.1%.
• Futures on the S&P 500 Index were little changed.
• The underlying gauge added 0.3% to close at a record on Tuesday.
• The Dow Jones Industrial Average rose 100.26 points to finish just shy of its record from July 19.
• McDonald’s and Caterpillar added at least 4% to pace gains.
Currencies
• The Aussie fell 0.6% to 78.90 US cents after the inflation figures and a speech by the country’s central bank governor.
• Australia’s second-quarter headline inflation rose less than expected from a year earlier.
• Reserve Bank of Australia Governor Philip Lowe said his global counterparts’ moves to withdraw stimulus from their economies “has no automatic implications” for policy Down Under.
• The Bloomberg Dollar Spot Index rose 0.1%, reversing an earlier loss as the euro declined.
• The euro fell 0.1% to $1.1637, though still held near the highest in almost two years after German business confidence data beat expectations.
• The yen was little changed at ¥111.92/$ after declining 0.7% on Tuesday in its first retreat in more than a week.
Commodities
• West Texas Intermediate crude rose 1% to $48.37, extending Tuesday’s 3.3% surge, its largest jump since November.
• Crude inventories declined by 10.2 million barrels last week in an American Petroleum Institute report released on Tuesday, people familiar with the data said.
• Copper rose 1.3%, extending a rally that lifted it to its highest level in more than two years.
• The metal for three-month delivery in
London is on course for its biggest two-day gain since February.
Bonds
• The yield on 10-year Treasuries was at 2.32%, down two basis points, after surging eight basis points in the previous session.
• Germany’s 10-year bund yield was down one basis point to 0.55% after rising six basis points on Tuesday.
• 10-year Australian government notes saw yields climb four basis points to 2.73%.
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