Sydney - Global stocks advanced as technology shares continued a rebound and hawkish comments from a Federal Reserve official allayed concerns about the strength of the world’s largest economy. The dollar was mixed after Monday’s gains.
Tech shares in the MSCI All-Country World Index advanced for a second day, after the Nasdaq 100 Index jumped the most since November. Japanese shares climbed to the highest since August 2015.
Hong Kong equities retreated ahead of MSCI’s decision on whether to include China’s domestic equities in benchmark indices. Treasuries fell on Monday after Fed Bank of New York President William Dudley said halting the tightening cycle now would imperil the economy.
“We’ve seen some unimpressive economic data recently, but Dudley appears unperturbed by them, providing relief for market participants,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities in Tokyo.
Dudley aligned himself with chair Janet Yellen in declaring his expectation that a tight labour market will eventually trigger a rebound in inflation data that has been unexpectedly weak in recent months. His comments were followed by remarks from Chicago Fed President Charles Evans, who said “the current environment supports very gradual rate hikes and slow preset reductions in our balance sheet.”
Fed officials last week raised their benchmark interest rate for the third time in six months and pushed ahead on plans to begin reducing the central bank’s $4.5trn balance sheet later this year, despite growing concerns over stalling inflation.
Here are some of the key upcoming events:
Vice-Chair Stanley Fischer speaks on Tuesday, with Fed officials making making appearances throughout the week. Still to come: Eric Rosengren, Robert Kaplan, Jerome Powell, James Bullard and Loretta Mester. MSCI announces whether it approved Chinese-listed stocks in its global benchmarks.
The $6.8trn onshore market is the world’s second largest and accounts for 9% of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts. MSCI’s decision is expected on Tuesday after the close of US markets.
Here are the main moves in markets:
Stocks
The Stoxx Europe 600 increased 0.3% as of 09:21. Japan’s Topix rose 0.7% to the highest since August 2015 amid weakness in the yen. Australia’s S&P/ASX 200 Index slipped 0.8%. The country’s largest banks retreated following ratings downgrades from Moody’s Investors Service.
Hong Kong’s Hang Seng Index fell 0.3%, reversing an earlier gain of 0.5%, and the Shanghai Composite Index dropped 0.1%. Futures on the S&P 500 Index rose less than 0.1%. The underlying gauge rose 0.8% on Monday as tech and health-care shares climbed.
Currencies
The Bloomberg Dollar Spot Index was little changed, after advancing 0.4% on Monday. The measure touched the lowest level since October last week. The yen fell 0.2% to 111.77 per dollar to the lowest since May 26.
The currency retreated 0.6% on Monday. The South Korean won dropped 0.3%. The New Zealand dollar climbed 0.3%, reversing earlier declines. The euro was flat at $1.1146 and the British pound rose 0.1% to $1.2752.
Bonds
The yield on 10-year Treasuries was little changed at 2.19%, after rising four basis points on Monday. Australian 10-year yields increased one basis point to 2.42%. Benchmark yields in the UK added one basis point.
Commodities
Oil rose 0.3%3 to $44.32 a barrel, after settling at the lowest level since November on Monday. Investors are weighing a forecast decline in US crude stockpiles against a revival in output from Libya, which is exempt from the OPEC-led cuts.
Gold climbed 0.2% to $1 246.88 an ounce, after closing on Monday at the lowest in more than a month.
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