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Stocks advance, dollar weakens before Fed and BoJ

Mar 13 2017 10:43
Bloomberg: Adam Haigh

Sydney - Global stocks rose as Chinese shares surged in Hong Kong and a positive US jobs report helped investors position for a week of central-bank policy decisions. The dollar weakened and oil slid for a sixth straight day.

The Hang Seng China Enterprises Index jumped the most since November amid easing concern that US-China political tensions will weigh on the yuan.

South Korean equities rose to the highest since May 2015, while European shares headed for a fourth straight gain. The dollar fell against most major currencies, with the euro climbing for a third day. Oil kept sliding below $50 as US drillers continued to boost activity, countering OPEC’s efforts to drain a global glut. Industrial metals advanced for a second day.

Global equities are trading near a record high as indications of firming growth in the U.S. and Europe coincide with China’s economy showing signs of improvement.

US jobs data at the end of last week cleared the way for the Fed to raise interest rates without forcing it to accelerate the pace for future tightening. The euro built on gains from Friday, when European Central Bank policy makers were said to have considered their ability to raise rates before a bond-buying program comes to an end.

Traders view a quarter-point Fed hike this week as a virtual certainty after Friday’s data showed US employers added more jobs than forecast in February. They’ll be watching the central bank’s policy decision for signals on what will come next.

Futures indicate the market is moving toward policy makers’ December projection of three rate increases in 2017. It would be the first year with multiple Fed hikes since 2006.

Goldman Sachs is joining the rush on Chinese shares, becoming the latest major brokerage to upgrade the market. China’s macroeconomy stabilized in the beginning of 2017, Ning Jizhe, head of the National Bureau of Statistics, said at the sidelines of the annual legislature meeting in Beijing on Sunday.

President Donald Trump will likely temper his criticisms of China, including his campaign claim that the country manipulates its currency, Steve Schwarzman, one of his top economic advisers, said Sunday on CNN. Read our Markets Live blog here.

What’s on traders’ watch lists this week: 

The BOJ is set to keep its rates and yield-curve policy unchanged in its policy decision on Thursday. The central bank could consider adopting a range for its 10-year bond yield target when it eventually looks to increase rates or needs to manage market volatility, according to people with knowledge of discussions at the BOJ.

The Bank of England, Swiss National Bank and Bank Indonesia are also expected to stand pat with policy decisions this week.  The Netherlands’ election takes place March 15 amid a growing diplomatic spat with Turkey. Earnings reports are due this week from firms including Oracle, Tiffany & Co., and Prudential. G-20 finance ministers gather in Germany for a series of meetings.

Here are the main market moves:

Stocks

The MSCI Asia Pacific Index advanced 0.7% as of 10:17. The Hang Seng China Enterprises Index surged 1.9%, the biggest jump since November 22. Japan’s Topix rose 0.2%, after the gauge rallied 1.2% on Friday to the highest level since December 2015. 

The Kospi index jumped 1%, led by a 1.1% gain in Samsung Electronics. Korean shares extended gains from last week, climbing as President Park Geun-hye’s ouster removes some uncertainty from politics in the nation. The Stoxx Europe 600 added less than 0.1%, after similar gains in each of the previous three sessions.

Currencies

The euro added 0.1% to $1.0685, extending its 0.9% surge on Friday. The British pound climbed 0.4% to $1.2221 The South Korean won jumped 1.1%. The Australian dollar advanced 0.5%, following Friday’s 0.5% gain. The Bloomberg Dollar Spot Index fell 0.1%, after dropping 0.6% on Friday. The yen rose 0.2% to ¥114.63/$.

Bonds

The yield on 10-year Treasuries fell one basis point to 2.56%, after falling three basis points in the previous session. The yield on 10-year Australian government bonds slid four basis points to 2.94%, tracking Friday’s Treasury rally.

Commodities

WTI crude dropped 0.3% to $48.34 a barrel. Crude has lost almost 10% over the past six days, breaking below the $50 a barrel level it had held above since OPEC and 11 other nations started trimming supply on January 1. Gold climbed 0.5% to $1 210.18, adding to Friday’s 0.3% gain. Zinc led gains in metals, rising 2%. Copper jumped 1.3%.

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