Stocks, dollar gain amid minutes as oil drops

Dubai - US equities rose with the dollar while Treasuries pared gains as investors saw a hawkish bent to the latest Federal Reserve meeting minutes, with officials debating the timing of balance-sheet reductions.

The S&P 500 Index rose a third day to close 0.9 % from its June 19 all-time high, even as the minutes showed some officials concerned "increased risk tolerance" among investors could be lifting asset prices and building risks to financial stability.

Chip makers beaten down in the past three weeks led a rebound in technology shares.

Treasury 10-year note yields held near 2.33 % and the dollar advanced versus most peers. Oil tumbled toward $45 after an eight-day rally.

The Fed minutes did little to alter market expectations for a third rate hike this year, most likely December as officials view tepid inflation rates as transitory. The central bank also signalled that September could mark the start of unwinding its $4.5trn balance sheet, though that is hardly a sure bet.

The comments on asset prices underscore why three officials, including Chair Janet Yellen, last week mentioned rising valuation metrics in separate speeches.

Markets had largely ignored the rising tensions on the Korean peninsula, with an emergency United Nations Security Council meeting on Wednesday looking to formulate a response to North Korea’s latest provocation.

Here’s what’s coming up:

The European Central Bank on Thursday releases minutes from its last meeting. Investors will look for clues on whether the bank is closer to tightening, after officials last week walked back comments from President Mario Draghi that the market interpreted as hawkish.

A G-20 summit kicks off in Hamburg this week. US President Donald Trump is expected to hold his first meeting with Russia’s Vladimir Putin as well as meet his Chinese counterpart Xi Jinping.

American employers probably added around 175 000 workers in June and wage growth probably strengthened, consistent with a solid labour market, economists project the US Labour Department to report on Friday.

These are the main moves in markets:

Stocks

The S&P 500 Index added 0.2 % to 2,433.64 at 4 p.m. in New York. The Nasdaq 100 jumped 1 %. Advanced Micro Devices climbed 8.6 % and Micron Technology rose 4.8 %. The Stoxx Europe 600 Index advanced 0.2 %.

Emerging-market stocks rose 0.4 %, adding to gains after the Fed minutes.

Currencies

The Bloomberg Dollar Spot Index strengthened 0.1 %.  The British pound edged higher to $1.2928.  The euro was little changed at $1.1341.

Commodities

West Texas Intermediate crude futures dropped 4.1 % to settle at $45.13 a barrel. The loss ended the longest winning streak this year, as Russia was said to oppose any proposal to deepen Opec-led production cuts. Gold futures rose 0.5 % to $1 225 an ounce.  

Copper futures posted the biggest loss in two weeks as inventories tracked by the London Metal Exchange climbed the most since early March.

Bonds

The yield on 10-year Treasuries fell two basis points to 2.33 %. The market was closed on Tuesday. UK benchmark yields advanced one basis point to 1.26 %. 

French yields were little changed, while those of Germany slipped one basis point to 0.47 %.