Wednesday , December 19 2018

US stocks rally as greenback strengthens, Treasuries slip

Bloomberg

US equities joined a global rally that began in Asia as investors set aside concern about escalating trade tensions to focus on the coming earnings season. The pound erased gains after pro-Brexit official Boris Johnson quit as UK foreign secretary.
The S&P 500 Index rose to the highest since mid-June and the Dow Jones Industrial Average popped through key technical levels. Miners and energy producers took the Stoxx Europe 600 Index to a fifth consecutive advance, the longest winning streak since March. The MSCI Asia Pacific Index jumped the most in a month.
The pound’s rally reversed after Johnson’s resignation threw the UK government into turmoil over negotiations to leave the European Union. The dollar strengthened against most major peers. Earlier, European bonds retreated as ECB executive board member Benoit Coeure played down any discussions of an “Operation Twist” for debt reinvestments. The Chinese yuan rebounded after its fourth weekly decline.
The start of earnings season this week may divert some attention away from the trade war that’s kept global stocks under pressure, while the data supported sentiment.
The US jobs report showed another month of gains in excess of 200,000.
“The markets, especially after the report on unemployment last week, seem to be pretty comfortable looking ahead and getting all the jitters about the trade war away,” Omar Aguilar, chief investment officer for equities at Charles Schwab Investment Management, said.
Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said. China releases June PPI and CPI on Tuesday. The most noteworthy US data is the June inflation report on Thursday, which consensus expects will show both headline and core price growth picking up. There’s another deluge of Treasury debt sales too, with a total $156 billion of notes and bills offered.
The S&P 500 rose 0.7 percent to 2,778.76 in New York. It’s headed for the highest close since June 15. The Stoxx Europe 600 Index rose 0.6 percent, hitting the highest in more than two weeks. The MSCI All-Country World Index increased 0.8 percent to the highest in almost three weeks. The MSCI Emerging Market Index advanced 1.4 percent on the largest gain in a week. The MSCI Asia Pacific Index surged 1.3 percent.
The Bloomberg Dollar Spot Index fell 0.3 percent. The euro increased 0.3 percent to $1.1785, the strongest in almost four weeks. The British pound rose 0.3 percent to $1.3316, the strongest in almost four weeks. The Japanese yen advanced less than 0.05 percent to 110.45 per dollar .
The yield on 10-year Treasuries gained four basis points to 2.86 percent, the highest in a week. Britain’s 10-year yield advanced five basis points to 1.312 percent. West Texas Intermediate crude fell 0.1 percent to $73.72 a barrel.

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