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Washington - US stocks rose toward a record and the dollar fell as traders pushed back bets on higher interest rates after weaker-than-expected data in the world’s largest economy. Oil gained.
The S&P 500 Index extended this year’s rally, and the MSCI Emerging Markets Index advanced to the highest level in more than a year. The ruble strengthened as oil extended gains on speculation that producers will revive talks to stabilise prices.
The dollar declined for a second day, while bond yields climbed. The pound dropped to the lowest in a month against the dollar on speculation data will show Britain’s decision to leave the European Union has negatively affected the economy.
Global equities are trading near a one-year high as evidence of uneven growth in the world’s biggest economies fuels optimism that central banks will come to the rescue by way of additional stimulus and looser monetary policy.
The probability that the Federal Reserve will increase interest rates this year eased to 42% in the futures market on Friday following the release of the US retail sales figures, from 49% a day earlier.
“Interest rates will stay low and the dollar should be quite stable,” said Hertta Alava, the head of emerging markets at FIM Asset Management in Helsinki. “That is supportive for emerging-market currencies. The oil price recovery is supportive for sentiment too.”
Stocks
The S&P 500 advanced 0.1% at 15:30 in New York, after US equities slipped from their highs on Friday following disappointing retail sales and consumer confidence data. A report showed manufacturing activity in the New York region unexpectedly contracted this month, while a gauge on homebuilder sentiment is set for later this morning.
The MSCI emerging markets gauge rose 0.4%, gaining for an eighth day to the highest since July 2015.
The Shanghai Composite jumped 2.4% as a measure of real estate companies had its steepest two-day rally in almost a year after stake purchases by China Evergrande Group fueled optimism of more mergers.
The Stoxx Europe 600 Index was little changed, with volume about 65% lower than the 30-day average for the time of day. The DAX Index rose as much as 0.8%.
Volkswagen added 1.5%, helping automakers to a rebound from Friday’s decline to post the best performance of the 19 industry groups on the Stoxx 600. Statoil was among the best-performing oil stocks as crude extended its advance above $44 a barrel. Glencore dragged raw material producers lower. Hennes & Mauritz advanced 2.5% after reporting a better-than-expected 10% increase in July sales.
Currencies
Currencies of commodity-producing nations led gains versus the dollar, with Russia’s rouble climbing 0.7%. The Mexican peso added 0.7%t and the rand advanced 0.9%. Thailand’s baht climbed 0.4% after a report showed the economy grew a more-than-estimated 3.5% in the second quarter.
China’s yuan dropped 0.1% to 6.6390 against the dollar, according to prices from the China Foreign Exchange Trade System. China’s broadest measure of new credit grew the least in two years in July, a report showed on Friday, after data indicated industrial production and investments also weakened.
The dollar weakened against most of its major peers amid receding chances of a Fed rate increase this year. The greenback fell 0.3% against the yen.
Sterling reached a one-month low before reports on inflation, retail sales and unemployment benefit claims for July, which will provide more detail on how the economy is faring after the June 23 Brexit referendum.
Hedge funds were the most bearish on the pound on record in the week ended August 9, after the Bank of England cut interest rates and boosted its stimulus plan the previous week. The pound fell to as low as $1.2883 on Monday, the weakest level since July 11. Against the euro, it touched the weakest level since 2013.
Commodities
Oil held gains on speculation that producers will revive talks to stabilise prices. West Texas Intermediate futures gained 0.6% to $44.75 a barrel.
UK month-ahead natural gas dropped 5.1% to 30.17 pence a therm, the lowest since May, according to ICE Futures Europe prices, dragged lower by subdued demand and the expected arrival of two liquefied natural gas shipments later this month.
“Downwards moves continue into the near curve, with news of two additional LNG shipments due into the UK over the coming weeks bolstering confidence in supplies,” said Marcel Boonaert, head of trading at Wingas UK.
Bonds
The yield on Treasuries due in a decade rose three basis points to 1.54%, after dropping by five basis points on Friday.
Germany’s 10-year yield was little changed at minus 0.1% and the yield on similar-maturity UK gilts was at 0.52%.
