Treasuries Rally, Euro Soars as S&P Treads Water: Markets Wrap

Updated on
  • U.S. equities little changed as policy, hurricane threats loom
  • ECB holds rate, stimulus; Draghi says medium outlook unchanged

Draghi Says QE Will Stay at Same Pace Through Dec.

U.S. stocks were little changed, while the dollar tumbled and Treasuries rallied as investors sounded a note of caution with Hurricane Irma barreling toward Florida and North Korea issuing threats. 

The S&P 500 Index, Nasdaq Composite Index and Dow Jones Industrial Average barely budged, while the euro strengthened after the European Central Bank signaled prolonged stimulus. The ECB’s dovish tone boosted the region’s currency to the highest in almost three years, fueling demand for dollar-denominated debt. That sent 10-year Treasury yields down to 2.05 percent. Gold advanced on signs that inflation in the U.S. and Europe remains subdued.

ECB President Mario Draghi said he’s watching the euro’s gains as policy makers edge toward settling the future of their bond-buying program. The euro’s surge -- more than 14 percent against the dollar this year -- was reflected in a downgrade to the ECB’s inflation outlook even as Draghi said economic growth remains solid.

Meanwhile, U.S. President Donald Trump’s surprise debt-ceiling deal with Democrats temporarily bolstered markets, but traders are alert to a potential escalation of North Korea risks amid concerns Pyongyang may fire a ballistic missile. Trump said that military action against the country wasn’t his first choice as South Korea moved to bolster its missile shield.

Fed Deputy Chairman Stanley Fischer’s impending departure added to uncertainty about leadership at the central bank as the end of Janet Yellen’s term approaches.

Terminal subscribers can read more on our Markets Live blog.

The key events this week:

  • China trade figures are anticipated to show another month of solid export growth, according to Bloomberg Intelligence.
  • Irma is expected to maintain strength and make landfall on the U.S. coast on Sunday.

And here are the main moves in markets:

Stocks

  • The S&P 500 Index fell less than 0.05 percent as of 4 p.m. in New York.
  • The Nasdaq Composite Index rose 0.07 percent while the Dow Jones Industrial Average fell 0.1 percent.
  • The Stoxx Europe 600 Index gained 0.3 percent and the U.K.’s FTSE 100 Index rose 0.6 percent.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.7 percent, hitting the lowest in more than two years with its sixth straight decline. 
  • The euro increased 0.9 percent to $1.2019, the strongest in almost three years. 
  • The British pound gained 0.4 percent to $1.3097, the strongest in almost five weeks. 
  • The Japanese yen increased 0.7 percent to 108.49 per dollar.

Bonds

  • The yield on 10-year Treasuries fell six basis points to 2.05 percent. 
  • Germany’s 10-year yield declined four basis points to 0.31 percent, the lowest in more than 10 weeks. 
  • Britain’s 10-year yield fell three basis points to 0.972 percent.

Commodities

  • Gold gained 1.1 percent to $1,349.04 an ounce, the highest in a year. 
  • West Texas Intermediate crude fell 0.1 percent to $49.11 a barrel. 
  • Copper sank 0.1 percent to $3.15 a pound, the first retreat in more than a week.

Asia

  • The Topix index rose 0.4 percent at the close in Tokyo, while the Kospi index in South Korea was up 1.1 percent and Australia’s S&P/ASX 200 Index was flat.  
  • Hong Kong’s Hang Seng Index fell 0.3 percent as Chinese indexes fluctuated.
  • The MSCI Asia Pacific Index climbed 0.4 percent.

— With assistance by Jeremy Herron, and Sonali Basak

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