US equities fluctuated near records, while the dollar’s rally stalled near a two-month high as investors assessed the prospects for tax reform after a Republican senator raised concern it could inflate the deficit.
The S&P 500 Index traded in a tight range close to all-time highs along with other US gauges. The dollar retreated after touching the highest level since July and 10-year Treasury yields fell towards 2.32 percent. Stocks in Europe edged higher, following rallies in Asia where Japanese shares closed at their highest in more than two years and developing nation equities jumped. Oil held above $50 a barrel. Traders in the US appear to be taking stock after the themes of tax reform, a potentially more hawkish Federal Reserve chief and strong PMI data helped to drive recent gains for both the greenback and equities. “There weren’t too many economic numbers on tap today, but some stories are starting to focus on the upcoming payroll numbers on Friday,” Peter Jankovskis, who helps oversee $1.6 billion as co-chief investment officer of Lisle, Illinois-based Oakbrook Investments, said.
Goldman Sachs Group Inc. analysts see the greenback as having room to run, thanks to solid growth prospects and the chance that Fed interest-rate hikes will prove more aggressive than market players currently anticipate.
Goldman sees the dollar rising particularly against the euro, which could be hurt by political concerns amid the Spanish woes over Catalonia and by elections in Austria and Italy in coming months.
The UK’s Johnson, Davis, Rudd, Fox speak at the Conservative Party Conference. Investors will monitor progress towards forming coalition governments in Germany and New Zealand after elections last month left no party in either country with a majority. US data this week include trade, durable goods and Friday’s September non-farm payrolls report, which may have less predictive power than usual for the economic outlook due to likely distortions from hurricanes that hit from late August.
The Stoxx Europe 600 Index dipped less than 0.05 percent. The MSCI All-Country World Index rose 0.1 percent, reaching the highest on record. The UK’s FTSE 100 Index climbed 0.1 percent, hitting the highest in almost eight weeks with its fifth consecutive advance.
The Bloomberg Dollar Spot Index rose 0.1 percent to the highest in almost 11 weeks. The euro increased 0.1 percent to $1.1744. The British pound decreased 0.3 percent to $1.3236, the weakest in almost three weeks. The yield on 10-year Treasuries increased less than one basis point to 2.34 percent. Germany’s 10-year yield gained two basis points to 0.47 percent. Britain’s 10-year yield rose four basis points to 1.370 percent. Gold was little changed at $1,271.42 an ounce, the weakest in eight weeks. West Texas Intermediate crude declined 0.4 percent to $50.39 a barrel, the lowest in two weeks. Japan’s Nikkei 225 Stocks Average jumped 1.1 percent to the highest close since August 2015.