Sydney - European stocks retreated as the euro extended a rally to the strongest in more than three years. The dollar headed for a fourth day of losses against major global currencies, and crude edged higher.
The Stoxx Europe 600 Index retreated even after advances in Asian stock markets. The euro strengthened for a fourth day and the yen climbed to a four-month high.
The yuan touched a two-year high after the People’s Bank of China raised the currency’s fixing to the strongest since May 2016. Gold advanced and West Texas oil climbed for a sixth day as Iraq joined calls for OPEC-led output cuts to continue.
Bets that the European Central Bank may further scale back monetary stimulus this year are helping to spur confidence in the euro, while weighing on a rally that has taken stocks to a three-year high.
Economists polled in a monthly Bloomberg survey bumped up their 2018 outlook for eurozone growth to 2.2%, close to the decade-high 2.4% pace estimated for last year.
The single currency also got a boost last week from signs Germany is making progress in forming a coalition government, a development that will be on investors’ radars this week. Company earnings releases are also set to dominate the agenda after the S&P 500 Index closed at a fresh record high on Friday.
Here’s what to watch out for this week:
• US markets are closed on Monday for the Martin Luther King Jr. holiday.
• Earnings season ramps up: Taiwan Semiconductor Manufacturing, ASML Holdings, Bank of America and Goldman Sachs are among some notable releases.
• Industrial production in the US probably increased in December, a report may show on Wednesday, completing a solid year for manufacturing.
• US housing starts probably slipped in December for the first time in three months as frigid winter weather impeded work, forecasts show ahead of Thursday’s release.
• The Bank of Canada’s interest-rate decision comes on Wednesday.
• Monetary policy announcements are also due in South Korea, South Africa and Turkey.
• China releases fourth quarter GDP, December industrial production and retail sales on Thursday.
And these are the main moves in markets:
Stocks
• The Stoxx Europe 600 Index fell 0.1% as of 09:26.
• The UK’s FTSE 100 Index declined 0.1%, the first retreat in a week.
• Germany’s DAX Index dipped 0.2%.
• Futures on the S&P 500 Index climbed 0.1% to the highest on record.
Currencies
• The Bloomberg Dollar Spot Index dipped 0.3% to the lowest in more than four months.
• The euro gained 0.1% to $1.2213, the strongest in about three years.
• The British pound rose 0.2% to $1.3755, the strongest in about 19 months.
Bonds
• Germany’s 10-year yield dipped one basis point to 0.57%, the biggest decrease in more than a week.
• Britain’s 10-year yield declined one basis point to 1.339%, the first retreat in a week and the largest decrease in more than a week.
Commodities
• Gold climbed 0.3% to $1 341.85 an ounce, the highest in more than four months.
• West Texas Intermediate crude gained 0.2% to $64.44 a barrel, hitting the highest in more than two years with its sixth consecutive advance.
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