U.S. Stocks Rise With Oil, Pound Falls on Brexit: Markets Wrap

  • S&P 500 adds to best rally in two weeks as energy shares jump
  • Oil surges as data show invenories rise less than forecast

How Brexit May Impact Downside Risks for Equities

U.S. stocks advanced as crude rallied on government data that eased concerns that supplies were bulging. Treasuries rose and the dollar slipped as the Trump administration battled to revive its legislative agenda, while the U.K. formally triggered the Brexit process.

Energy producers led gains in the S&P 500 Index, as equities headed for a sixth straight quarterly gain. Banks slipped after pacing Tuesday’s rally. Crude rose above $49.50 a barrel as oil stockpiles rose less than forecast. Ten-year Treasury yields slid below 2.40 percent, while Mexico’s peso strengthened as investors assessed the prospects for Republican tax reform.

Global stocks remain on course for a fifth straight month of gains as the reflation trade triggered by Trump’s election proves its resilience. Stronger growth -- from the world’s biggest economy to developing nations -- has helped underpin the rally, even amid doubts about the president’s ability to enact pro-growth policies. Federal Reserve officials continue to make the case for two more rate hikes in 2017, in line with market expectations.

Markets showed little reaction to the U.K.’s formal triggering of Brexit as the move had been broadly telegraphed. Still, the divorce will redefine the country’s relationship with its largest trading partner and end decades of deepening political integration on the continent.

Read our Markets Live blog here.

Here are this week’s key events:

  • Proposals to design and build U.S. President Donald Trump’s promised 2,000-mile border wall between the U.S. and Mexico are due.
  • Samsung Electronics Co. will introduce its Galaxy S8 smartphone, the company’s first
    new mobile phone since the debacle with the Note 7 battery fires that led to its recall.

Here are the main moves in markets:

Stocks

  • The S&P 500 added 0.1 percent to 2,361.15 as of 4 p.m. in New York. The index rallied 0.7 percent Tuesday, with banks surging. Energy producers added 1.1 percent Wednesday.
  • The equity benchmark is up 5.5 percent in the first three months of the year, on track for a sixth straight quarterly advance.
  • The Stoxx Europe 600 Index rose 0.3 percent to trade at the highest level since Dec. 2. The gauge is higher by 4.7 percent in the first quarter, the third straight advance.
  • The MSCI Emerging Market Index gained 0.2 percent, pushing its advance in March toward 4 percent. The measure has gained 13 percent in the quarter, its best in four years.

Currencies 

  • The British pound fell 0.1 percent to $1.2441, while the euro weakened 0.4 percent to $1.0769.
  • The Bloomberg Dollar Spot Index slipped 0.1 percent after surging 0.5 percent Tuesday.
  • The peso rallied as the prospects weakened for a border adjustment tax that would likely harm the U.S.’s southern neighbor.

Bonds

  • Treasuries gained, with the yield on the benchmark note due in a decade falling four basis points to 2.38 percent. The yield advanced four basis points Tuesday.
  • The Treasury’s $28 billion seven-year note sale drew a yield of 2.215 percent, with indirect bidders buying 71.1 percent. That’s the third-highest since the government began offering the maturity in 2009,
  • European bonds advanced, with the yield on Germany’s 10-year bunds falling four basis points to 0.35 percent.

Commodities

  • West-Texas Intermediate crude oil rose 2.3 percent to settle at $49.51 a barrel. Crude stockpiles climbed by a less-than-anticipated 867,000 barrels to 534 million, the highest in weekly data going back to 1982.
  • Gold futures slipped 0.2 percent to end near $1,255 an ounce. The metal is on pace for a 0.1 percent gain in the quarter, its best since March 2016.
  • Aluminum rose 0.8 percent to settle at $1,960 a ton on the London Metal Exchange after reaching $1,961, the highest since May 2015.

— With assistance by Cecile Gutscher, Simon Ballard, Sid Verma, and V Ramakrishnan

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