Bonds Climb as Dollar Holds Gain; Stocks Advance: Markets Wrap

• April 23 2018
• Samuel Potter

U.S. Treasuries rose, leading most European government bonds higher, as investors hit pause on a selloff that took benchmark rates within a whisker of 3 percent. European stocks climbed following gains for most Asian markets as the earnings season picked up s…

U.S. Treasuries rose, leading most European government bonds higher, as investors hit pause on a selloff that took benchmark rates within a whisker of 3 percent. European stocks climbed following gains for most Asian markets as the earnings season picked up steam.

As the yield on 10-year U.S. notes slipped, the dollar was little changed at about its highest level since January, managing to preserve its gains from Monday. The yen retreated, spurring Japan’s Topix index to the highest in almost two months. Chinese shares rallied on signs the government may ease off tightening measures if warranted. The Stoxx Europe 600 Index advanced a second day, with U.S. equity futures also climbing.

Investors have been weighing the implications of rising bond yields that were in part spurred by higher commodity prices and concern surrounding their inflationary effect on the wider economy. But volatility in interest-rate markets remains low and equity price swings are well off the highs seen earlier this year, indicating investors believe rising borrowing costs may not be enough to cause outsize pain to equities -- for now.

“For us it’s more the reasons why we’re seeing the move: better growth outlook, a little bit more inflation and faster rate hikes being priced in by the market,” Kerry Craig, Melbourne-based global market strategist at JPMorgan Asset Management, told Bloomberg TV. “It should be reaffirming the fact that we see a global economy that’s looking relatively healthy.”

Still, there remained pressure on technology shares after a slew of companies reported disappointing earnings. The Philadelphia Semiconductor Index is down more than 7 percent over the past four days.
Elsewhere, aluminum extended its biggest slump since 2005 after the Treasury Department signaled it may lift United Co. Rusal sanctions if Oleg Deripaska divests control of the company. Rusal shares in Hong Kong posted their biggest ever gain. Oil rose back above $69 a barrel.

These are some important events coming up this week:

• U.S. GDP and jobless claims are due.
• Earnings season continues. Among those reporting: Amazon.com, Samsung and Credit Suisse.
• The European Central Bank has a rate decision on Thursday. Investors will watch for any sign that officials are preparing a shift in stimulus plans for their June meeting.
• Bank of Japan announces its latest policy decision Friday and releases a quarterly outlook report.

Terminal users can read more in our markets live blog.

And these are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index gained 0.2 percent as of 9:34 a.m. London time, the highest in more than 11 weeks.
• Futures on the S&P 500 Index advanced 0.4 percent, the biggest gain in a week.
• The MSCI All-Country World Index increased 0.1 percent.
• The U.K.’s FTSE 100 Index advanced 0.3 percent, reaching the highest in more than 11 weeks on its sixth consecutive advance.
• Germany’s DAX Index advanced 0.5 percent to the highest in 11 weeks.
• The MSCI Emerging Market Index fell less than 0.05 percent.
• The MSCI Asia Pacific Index increased 0.4 percent.

Currencies

• The Bloomberg Dollar Spot Index fell less than 0.05 percent.
• The euro fell 0.1 percent to $1.2196, the weakest in almost eight weeks.
• The British pound dipped less than 0.05 percent to $1.3934, reaching the weakest in six weeks on its sixth consecutive decline.
• The Japanese yen declined 0.1 percent to 108.81 per dollar, hitting the weakest in almost 11 weeks with its fifth straight decline.

Bonds

• The yield on 10-year Treasuries decreased two basis points to 2.95 percent and the biggest tumble in more than two weeks.
• Germany’s 10-year yield sank two basis points to 0.61 percent, the largest tumble in more than two weeks.
• Britain’s 10-year yield declined four basis points to 1.539 percent.

Commodities

• West Texas Intermediate crude increased 0.6 percent to $69.05 a barrel, the highest in more than three years.
• Copper gained 1 percent to $3.16 a pound.
• Gold climbed 0.1 percent to $1,326.43 an ounce.

— With assistance by Ye Xie, and Adam Haigh