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Madrid - Government bonds advanced as the Bank of Japan signaled it will maintain its current stimulus, while European stocks erased a gain as optimism around corporate earnings and the end of the U.S. shutdown began to ebb. Gold and oil rose.
Futures for the S&P 500 Index also reversed to trade lower and the greenback strengthened against the euro and pound in the wake of US President Donald Trump’s first major move on foreign trade. Earlier in Asia, the MSCI Asia Pacific and Hong Kong’s Hang Seng indexes had posted fresh records.
The yen rose, erasing an earlier drop when the BOJ damped speculation it’s close to reducing monetary stimulus.
Investors will closely watch how markets respond to Trump’s import tariffs. Any positive impact from his signing of a temporary government spending bill that ended a three-day partial shutdown appears to have faded, perhaps because the deal simply delayed tough decisions for a few weeks.
Traders are also closely watching results coming week from European, US and Japanese companies. Netflix soared in late trading after posting its biggest quarter ever. Wynn Macau gained after reporting stronger-than-expected results. LG was among those underperforming thanks to the Trump administration’s protectionist moves.
Earlier, investors scrutinised comments from BOJ Governor Haruhiko Kuroda that the central bank wasn’t in a position to consider exiting its current policy after the board voted 8-1 to keep interest rates and asset purchases at current levels.
The MSCI Emerging Markets Index advanced an eighth day, helped by stronger oil prices. West Texas crude futures climbed toward $64 a barrel, buoyed by forecasts for a record run of declines in US crude stockpiles.
Here’s what to watch out for this week:
• Earnings season is in full swing: Novartis, General Electric, Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks and Hyundai all come later in the week.
• Barring any last minute changes in Washington, President Donald Trump will join world leaders and senior executives in Davos, Switzerland, for the annual World Economic Forum.
• The European Central Bank announces its rate decision on January 25.
•The UK House of Lords is considering Prime Minister Theresa May’s Brexit bill this week.
These are the main moves in markets:
Stocks
• The Stoxx Europe 600 Index rose less than 0.05% as of 12:34.
• The MSCI All-Country World Index increased 0.2% to the highest on record.
• The UK’s FTSE 100 Index rose less than 0.05%.
• Germany’s DAX Index jumped 0.5% to the highest on record.
• The MSCI Emerging Market Index increased 0.8% and the largest climb in more than a week.
• Futures on the S&P 500 Index decreased 0.1%.
Currencies
• The Bloomberg Dollar Spot Index rose 0.1%.
• The euro declined 0.1% to $1.2247.
• The British pound decreased 0.3% to $1.3948, the largest decrease in almost three weeks.
• The Japanese yen climbed 0.5% to 110.41 per dollar, the strongest in almost 19 weeks on the biggest increase in almost two weeks.
Bonds
• The yield on 10-year Treasuries sank three basis points to 2.62%, the largest tumble in almost four weeks.
• Germany’s 10-year yield fell one basis point to 0.55%, the lowest in almost two weeks on the biggest fall in a week.
• Britain’s 10-year yield fell two basis points to 1.34%, the first retreat in a week.
Commodities
• Gold climbed 0.3% to $1,337.54 an ounce, the highest in a week.
• West Texas Intermediate crude gained 0.2% to $63.72 a barrel.
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