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New York - US technology shares led gains that set benchmark equity indices on course for fresh records, while hawkish comments from a Federal Reserve official boosted the dollar and Treasury yields.
The Nasdaq 100 Index halted a three-day slide, as large-cap tech stocks rebounded from two weeks of declines. Treasuries fell after William Dudley said halting the tightening cycle now would imperil the economy. French equities rose after the country’s new president won a free hand to drive through economic reforms. The pound edged higher and the euro was steady as Brexit talks began.
In Asia, the focus is on the MSCI decision on whether to include China A shares in its global indexes; Hong Kong stocks surged in advance of Tuesday’s announcement. Oil erased a drop, but continues to languish at about $45 per barrel as US drillers continue to add rigs, blunting OPEC-led efforts to rebalance an oversupplied market.
Investors are in risk-on mode as the week begins, even as a cloud of uncertainty swirls around both UK leadership and the outlook for Brexit negotiations. Macron’s decisive victory was another leg up for pro-European parties, while markets globally took the hawkish tone struck by the Federal Reserve last week in their stride.
“Risk assets around the world are rallying again as the ‘carry party’ resumes,” Societe Generale SA strategist Kit Juckes wrote in a client note. Fed chair Janet Yellen “did nothing to persuade the market” to take its hawkish outlook for the path of interest rates seriously, he said.
Here are some of the key upcoming events:
Chicago Fed President Charles Evans also speaks Monday in what will be a slew of Fed appearances scheduled for this week. Vice-Chair Stanley Fischer is up tomorrow, then the list reads: Eric Rosengren, Robert Kaplan, Jerome Powell, James Bullard and Loretta Mester. MSCI announces whether it approved Chinese-listed stocks in its global benchmarks.
The $6.8trn onshore market is the world’s second-largest and accounts for 9% of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts. MSCI’s decision is expected on Tuesday after the close of US markets. The International Paris Air Show is underway.
Here are the main moves in markets:
Stocks
The S&P 500 Index rose 0.4% to 2 442.93 as of 15:31. A close at that level would mark a record. The Nasdaq 100 rose 0.8%, while small caps in the Russell 2 000 Index added 0.5%. The Stoxx Europe 600 jumped 0.8% after falling 0.5% last week.
Currencies
The Bloomberg Dollar Spot Index edged higher by 0.2%. The yen declined 0.4% to 111.321 per dollar. The pound fell 0.1% to $1.2761. The euro dropped 0.2% to $1.1176.
Bonds
The yield on 10-year Treasuries rose two basis points to 2.17%. UK 10-year yields rose one basis point to 1.03%; those in Germany also increased one basis point, to 0.28%.
Commodities
West Texas Intermediate oil gained 0.2% to $44.83 a barrel. Crude has fallen four weeks straight as US drillers continue to add rigs, blunting OPEC-led efforts to rebalance an oversupplied market. Gold dropped 0.1% to $1 252.33 an ounce, heading for an eighth decline in nine sessions.
Asia
Samsung Electronics led gains among tech shares in the MSCI Asia Pacific Index, climbing 2.2%. Japan’s Topix advanced as the yen weakened. Hong Kong stocks surged 1.2% before a decision on whether MSCI will include China shares in global indices.
The Hang Seng China Enterprises Index jumped 1.4%, the most since May 25. The Australian dollar dropped after Moody’s cut the long-term ratings on the country’s four major banks. It later erased the decline.
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