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Hong Kong - Global equities were headed for the highest close in three weeks and the dollar rose versus most peers as investors waited to see whether comments from Federal Reserve chair Janet Yellen would disrupt the calm that’s settled over financial markets.
Stocks were poised for the steepest weekly advance in more than a month as financial risks around the world eased.
Oil slipped after touching $50 a barrel this week for the first time in at least six months and iron ore rebounded. Britain’s pound was the biggest gainer among major currencies this week on growing confidence the UK will remain in the European Union. As emerging markets rebounded, Russia and Qatar returned to international debt markets for the first time in at least three years.
The MSCI All-Country World Index and developing-nation currencies trimmed losses for May as global markets became more comfortable with prospects for US interest rates after Fed officials signaled borrowing costs will rise. Traders are now predicting better-than-even chance of an increase in July, so a misstep by Yellen risks upsetting a lull that has sent currency volatility to the lowest since January.
“It will be a difficult task for Yellen,” said Ulrich Leutchmann, head of currency strategy at Commerzbank in Frankfurt. “The discussion today will center around her past achievements and not on actual monetary policy, but if she doesn’t give any hawkish signal, many in the market will interpret this as dovishness given recent hawkish comments” by other Fed officials.
Yellen’s appearance is impacting traders’ long weekend plans, read more here.
Jeffrey Gundlach, chief executive of DoubleLine Capital LP in Los Angeles, said he expects a dovish speech from Yellen and predicts the Fed will refrain from raising interest rates in June unless traders in the futures market assign a probability of at least 50% to such a move.
Stocks
The MSCI AC World Index rose 0.1% as of 12:32, leaving it 2.1% higher for the week. The Stoxx Europe 600 Index was little changed on Friday, with trading volumes 32% below the 30-day average before holidays in the UK and US on Monday. Futures on the S&P 500 rose 0.1%, with the index up 1.8% this week, its biggest increase in more than two months.
Steelmaker Voestalpine led gains in European miners, rising 3.2% after Berenberg wrote in a note that the company is benefiting from strength in the auto industry. Peer ArcelorMittal added 2.4%. Roche Holding climbed 3.8% after its Genentech unit reported positive drug results.
The MSCI Emerging Markets Index climbed 0.8%, headed for its first weekly gain in six to halt the longest slump since August. Japan’s Topix climbed to a one-month high as local newspapers reported the likely postponement of a sales-tax increase and a drop in consumer prices reinforced expectations the central bank will add to record stimulus.
Currencies
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, climbed 0.1% after losing 0.2% in each of the last two trading sessions.
The MSCI Emerging Markets Currency Index rose 0.4% this week, snapping a run of three weekly losses. Turkey’s lira and Russia’s ruble led gains, climbing more than 1% in the period.
The currencies of oil-exporting nations pared their weekly advance on Friday as oil retreated. The Canadian dollar, Norwegian krone and the ruble weakened at least 0.3%.
The pound strengthened 1% this week, the most among 16 major peers. A poll by former Conservative lawmaker Michael Ashcroft showed almost 65% of voters believe the UK will remain in the European Union after a June 23 referendum.
Currencies
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, climbed 0.1% after losing 0.2% in each of the last two trading sessions.
The MSCI Emerging Markets Currency Index rose 0.4% this week, snapping a run of three weekly losses. Turkey’s lira and Russia’s rouble led gains, climbing more than 1% in the period.
The currencies of oil-exporting nations pared their weekly advance on Friday as oil retreated. The Canadian dollar, Norwegian krone and the rouble weakened at least 0.3%.
The pound strengthened 1% this week, the most among 16 major peers. A poll by former Conservative lawmaker Michael Ashcroft showed almost 65% of voters believe the UK will remain in the European Union after a June 23 referendum.
Commodities
Oil trimmed its third weekly advance as Canadian energy producers moved to resume operations after wildfires eased. West Texas Intermediate dropped 1.1% to $48.95 a barrel, paring the weekly gain to 2.5%. Brent slid 1.5% to $48.85.
Prices climbed above $50 a barrel on Thursday for the first time in more than six months as a decline in US crude stockpiles and production accelerated. The Organisation of Petroleum Exporting Countries may stick to its strategy of prioritizing market share over prices when it meets next week.
Strikes that disrupted operations at French refineries entered their second week, with at least four plants fully halted and more than a fifth of fuel stations experiencing shortages. The gasoil crack, which reflects the price premium of fuels like diesel over crude oil, was $10.36 a barrel, bringing the average for the week to the highest since December.
Iron ore futures in Dalian rebounded from the lowest level since February as authorities in China said there’s room to boost growth. Group of Seven leaders pledged to fix excess industrial capacity and a global glut of the metal caused by government subsidies and support.
Industrial metals also advanced, with copper heading for its first weekly gain this month. The metal rose 1%, bringing the gain the week to 2.8%. Nickel climbed 0.7% and zinc advanced 1.1%.
Gold was little changed at $1 219.19 an ounce. The precious metal is heading for the biggest monthly loss since November as investors anticipate higher borrowing costs in the US.
Bonds
The yield on Treasuries due in a decade was little changed at 1.83%, while that on similar-maturity Japanese debt fell one basis point to minus 0.12%. The yield on German 10-year bunds fell two basis points to 0.13%.
Russia’s $1.75bn of bonds due 2026 rose on the first day of trading, with the yield at 4.599%. The government sold the debt this week at a yield of 4.75% in its first Eurobond offering since sanctions were imposed by the US and Europe for its role in Ukraine’s crisis.
Qatar sold $9bn of bonds in three maturities on Wednesday, almost double the amount expected by analysts.
Societe Generale SA sold $1.1bn of Samurai bonds Friday, the biggest deal this year in the Japanese yen debt market for overseas issuers. The issuance included seven-year notes at a yield of 0.28%. Toyota sold 20-year yen bonds at a yield of 0.343%.
Global issuance is set for one of the busiest months ever, with non-financial companies on track to sell more than $232bn of debt by month-end, according to data compiled by Bloomberg. Companies including Dell and Johnson & Johnson have sold bonds.
The cost of insuring corporate debt was set for the biggest weekly decline in 11. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies was little changed at 71 basis points. It’s fallen seven basis points this week. An index of swaps on junk-rated companies rose one basis point to 307 basis points, paring the weekly decline to 26 basis points.
