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Dubai - Global stocks were mixed and the dollar edged lower amid thin trading as investors weighed the latest comments from a Fed official on the path of borrowing costs. The British pound advanced after a selloff.
With markets in the UK, US and China all closed for public holidays, volumes were depressed across the board and most moves were muted. The pound posted the biggest gain among G-10 currencies, though not enough to erase Friday’s plunge when polls showed the coming election may be closer than expected.
The rand reversed a rally after President Jacob Zuma survived a bid by some members of his party to oust him. Italian assets fell as a former prime minister raised the prospect of an early election.
Despite the longest winning streak for US stocks since February and record highs posted by equities globally, the ongoing bond rally hints at an undercurrent of investor caution.
With the fate of the Trump administration’s pro-growth stimulus plans uncertain, the dollar is one of the weakest-performing major currencies this year, even as the Federal Reserve prepares for more rate hikes. Gauging the ability of the global economy to withstand rising borrowing costs will be key for traders.
“The US economy is about as close to the Fed’s dual-mandate goals as we’ve ever been,” Federal Reserve Bank of San Francisco President John Williams said in Singapore on Monday.
“With the attainment of our dual-mandate goals close at hand, it’s more important than ever for monetary policy to work toward what I like to call a ‘Goldilocks economy’ - an economy that doesn’t run too hot or too cold.”
Don’t let the quiet start to the week fool you.
Here are just some of the key events coming up:
Euro FX and bond markets will be on Mario Draghi alert on Monday as the ECB president speaks to the European parliament. Euro-area data this week may show the strongest economic confidence in a decade on Tuesday.
The preliminary headline inflation rate for the region will come on Wednesday. Fed speakers are competing to provide the last word before the FOMC’s June 13-14 meeting, it seems. Lael Brainard and Robert Kaplan will be in New York on Tuesday and on Wednesday, respectively.
The US jobs report on Friday should bolster the case for a rate hike, with a gain of 180 000 jobs expected. Brazil’s central-bank decision on Wednesday will probably see a cut of 75 to 100 basis points from the current 11.25%, according to economists.
China’s May manufacturing PMIs on Wednesday could indicate that the nation’s 2017 growth has already peaked. The EIA is due to release its monthly supply reports on Wednesday.
And here are Monday’s main movers:
Stocks
The Stoxx Europe 600 Index fell 0.1% as of 13:50. Futures on the S&P 500 Index rose by less than 0.1% after the underlying gauge closed at a record high on Friday.
Currencies and Bonds
The British pound climbed 0.3% after the biggest weekly decline since November. The euro was little changed at $1.1185. Bloomberg’s Dollar Spot Index edged lower by less than 0.1%. The rand fell 0.5%.
The yen was little changed at 111.31 per dollar. The yield on 10-year Treasuries was 2.25% at the end of last week. Cash trading on the securities is closed for the day. The yield on 10-year Italian bonds jumped eight basis points after former Prime Minister Matteo Renzi raised the prospect of an early election.
Commodities
West Texas oil fell 0.2% to $49.70 a barrel. OPEC underwhelmed investors with its production-cut extension deal last week, while Baker Hughes said on Friday that US explorers added two oil rigs to take the count to the highest level since April 2015. Gold was little changed at $1 267.14 an ounce.
Asia
South Korea’s Kospi fell for the first time in seven sessions, slipping from a record. North Korea tested another missile, days after world leaders urged Kim Jong Un to abandon his nuclear weapons programme.
Chinese developers lifted the Hang Seng Index, with China Evergrande Group surging to a record in Hong Kong.
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