Commodities Rally as Metals Surge; Bonds Slide: Markets Wrap

• April 18 2018
• Samuel Potter

Metals extended their stellar gains on Thursday, driving another rally in Bloomberg’s commodity index as investors continue to fret about how Russian sanctions will impact the market. Government bonds retreated amid an upbeat global growth outlook.

Metals extended their stellar gains on Thursday, driving another rally in Bloomberg’s commodity index as investors continue to fret about how Russian sanctions will impact the market. Government bonds retreated amid an upbeat global growth outlook.

Aluminum and nickel led the advance as the BCOM Index headed for the highest level since 2015. U.S. 10-year Treasury yields climbed to 2.89 percent after leaping on Wednesday in the wake of the Federal Reserve’s Beige Book report, which showed a solid outlook for the economy despite trade concerns. European bonds played catch up, and yields in the region jumped.

In the equity market, European stocks struggled for traction following two days rising and in the wake of a mixed bag of corporate earnings, even after shares across Asia built on gains from a day earlier. Miners rose amid the commodity rally, and energy firms climbed in the wake of an industry report showing crude inventories declining. West Texas oil advanced.

For once though, all the action seems to be outside the equity space as the commodity rally accelerates and investors ponder the outlook for rates and the bond market. Optimism over expansion has been tested by the flattening yield curve, though there’s also been some respite for traders as geopolitical tensions showed signs of dissipating.

Elsewhere, the Australian dollar fluctuated after employment in the country rose less than forecast in March. It turned higher amid the commodity rally. The yen slipped as U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe agreed to work closely on bilateral trade.

Terminal users can read more in our markets live blog.

Here are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index rose less than 0.05 percent as of 11:09 a.m. London time.
• Futures on the S&P 500 Index fell 0.2 percent.
• The MSCI All-Country World Index increased 0.1 percent to the highest in almost five weeks.
• The U.K.’s FTSE 100 Index jumped 0.2 percent to the highest in more than 10 weeks.
• Germany’s DAX Index declined 0.1 percent.
• The MSCI Emerging Market Index climbed 0.9 percent to the highest in four weeks.
• The MSCI Asia Pacific Index increased 0.5 percent to the highest in four weeks.

Currencies

• The Bloomberg Dollar Spot Index increased 0.1 percent to the highest in a week.
• The euro decreased 0.1 percent to $1.2367.
• The British pound declined 0.1 percent to $1.419, the weakest in more than a week.
• The Japanese yen fell 0.2 percent to 107.40 per dollar, the weakest in eight weeks.

Bonds

• The yield on 10-year Treasuries climbed two basis points to 2.89 percent, the highest in a month.
• Germany’s 10-year yield gained four basis points to 0.57 percent, the highest in more than four weeks on the largest climb in 10 weeks.
• Britain’s 10-year yield gained five basis points to 1.465 percent, the highest in more than four weeks.

Commodities

• West Texas Intermediate crude rose 0.5 percent to $68.82 a barrel, the highest in more than three years.
• Copper dipped 0.3 percent to $3.17 a pound.
• Gold decreased 0.2 percent to $1,346.99 an ounce, the first retreat in a week.

— With assistance by Adam Haigh