Stocks extend rally before earnings, dollar rises

Moscow - European stocks followed their Asian counterparts higher before the start of an earnings season that’s expected to produce strong enough profit outlooks to support near-record high equity prices.

The euro and the pound retreated against the dollar.

The Stoxx Europe 600 index extended its biggest weekly advance since April after shares from Hong Kong to Sydney climbed. Markets in Tokyo were closed Monday for a holiday.

A slew of US banks are among companies giving results this week. Oil traded above $61 a barrel.

With risk assets enjoying a strong start to 2018, corporate earnings may dictate the next move for equity markets. The S&P 500 Index posted its best week since December 2016 as investors speculated that Republican tax cuts will lead to higher company profits.

In Europe, attention is returning to Germany’s struggle to form a government, restraining the single currency. The pound fell and UK stocks were flat following weak economic data and reports that Prime Minister Theresa May is considering creating a position for a minister in charge of contingency planning for a no-deal Brexit.

South Korea’s currency reversed gains as authorities said they would take action to stem one-sided moves in the won. The comments came one day before the nation is slated to hold high-level talks with North Korea for the first time since 2015.

Here are some of the other main events to watch for this week:

US inflation data will probably show price pressures remain muted, giving hawks little reason to argue for faster tightening. San Francisco Fed President John Williams and head of the New York Fed Bill Dudley are among policy makers scheduled to speak. 

China producer and consumer prices data are due on Wednesday, while a reading on the country’s money supply is expected in coming days.

US firms announcing earnings this week include JPMorgan Chase & Company, Wells Fargo and BlackRock.

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index increased 0.3% as of 10:47am London time, the highest in more than two years. The MSCI All-Country World Index climbed less than 0.05%, and reached the highest on record. The MSCI Emerging Market Index gained 0.4%, hitting the highest in almost seven years.

Futures on the S&P 500 Index advanced less than 0.05%, heading the gauge toward its fifth consecutive advance.

Currencies

The euro dipped 0.2% to $1.2003, the weakest in more than a week. The Bloomberg Dollar Spot Index advanced 0.2% to 1 154.68. The British pound decreased 0.2% to $1.3544.

Bonds

The yield on 10-year Treasuries fell one basis point to 2.47%.

Germany’s 10-year yield decreased one basis point to 0.43%, the lowest in a week.

Commodities

Gold increased less than 0.05% to $1 319.70 an ounce. West Texas Intermediate crude increased 0.5% to $61.73 a barrel. Copper was unchanged at $3.23 a pound, the lowest in more than two weeks.