Treasuries Gain With Gold, U.S. Stocks Erase Drop: Markets Wrap

  • 10-year yield falls to 3-week low, bullion at 3-month high
  • Oil advances past $52 a barrel, gold extends advance

LSE's De Grauwe: Markets Move From Paralyzed to Overshot

Treasuries rose for a fourth day and gold reached a three-month high as demand for haven assets persisted with investors assessing political risks in Europe and the U.S. American equities erased losses after crude rebounded above $52 a barrel

The S&P 500 Index was little changed as energy producers turned higher after an unexpected slide in U.S. gasoline supplies boosted the price of crude. Bank shares slipped as yields on 10-year Treasury notes fell to 2.33 percent. Bond auctions in Europe lifted debt in Germany and Portugal. Gold topped $1,240 an ounce. Bloomberg’s dollar index fell for the first time in three days.

Trades sparked by Donald Trump’s election continued to falter as long-awaited details on pro-growth policies remain undelivered. Even one of the best corporate earnings season since the financial crisis hasn’t been able to jolt equities higher, as macroeconomic uncertainty has driven demand for safety. The calendar for data is light in the week.

“There is less macro and more micro driving the market because we are in the earnings season,” Lucy MacDonald, chief investment officer for global equities at Allianz Global Investors, said on Bloomberg Television. “But we haven’t had an election for a while and we know we have plenty coming up. The negative outcomes aren’t really priced in.”

What’s coming up in the markets:

  • A U.S. court of appeals is reviewing arguments on whether to reinstate the Trump administration’s temporary ban on immigration, with the outcome likely to be appealed to the Supreme Court. A decision is not due on Wednesday.
  • A strike looms at BHP’s Escondida mine. Workers at the world’s largest copper operation vowed to down tools indefinitely after wage negotiations with the company failed. The walkout will halt all production at the site.

Read our Markets Live blog here.

Stocks

  • The S&P 500 Index rose 0.1 percent to 2,294.65 at 4 p.m. in New York, 0.2 percent below an all-time high.
  • Financial shares lost 0.8 percent as the rally in bonds threatened interest income.
  • High-dividend yielding industries surged, with utilities and real-estate stocks jumping at least 0.6 percent.
  • The Dow Jones Industrial Average fell 0.2 percent as banks and industrial shares slipped.
  • The Stoxx Europe 600 Index advanced 0.3 percent.
  • Emerging market stocks added 0.3 percent.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1 percent, paring losses that reached 0.3 percent. 
  • The reversal came after a 10-year Treasury auction was poorly received, with traders still apprehensive about the Trump administration’s currency and trade policies.
  • The euro was little changed at $1.0683 and the British pound strengthened to $1.25188.

Commodities

  • Oil erased a loss of 1 percent to climb 0.5 percent to $52.42 a barrel in New York, looking to end a two-day slide.
  • Oil has fluctuated above $50 a barrel since a deal to trim output between the Organization of Petroleum Exporting Countries and 11 other nations took effect on Jan. 1.
  • Copper three-month forwards jumped 1.8 percent after workers at the biggest mine in Chile vowed to strike. Goldman Sachs Group Inc. forecast what would be the first deficit of the metal since 2011.
  • Gold climbed to the highest in almost three months as investors purchased metal through the biggest exchange-traded fund for a fifth day, the longest buying spree since June. Futures rose 0.5 percent to settle at $1,239.24 an ounce.

Bonds

  • Yields on 10-year Treasuries dropped four basis points to the lowest in three weeks, as bonds extending the longest rally since June.
  • Wednesday’s $23 billion 10-year U.S. note sale drew a yield of 2.33 percent, with a bid-to-cover ratio of 2.29, compared with an average of 2.5 in the previous 10 auctions.
  • Strong demand for government bond sales by Germany, Portugal and Finland drove gains for European debt ahead of Treasury’s 10-year note auction this afternoon.
  • Portugal’s 10-year debt yield fell 13 basis points while German benchmark yields dropped five basis points to 0.30 percent.
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