S&P 500 Hits Record; Nafta Progress Boosts Peso: Markets Wrap

Updated on
  • Global equity indexes push higher; commodities climb
  • Mexico envoy’s remarks on trade talks also drive up loonie
Mike Wilson, Morgan Stanley chief U.S. equity strategist, discusses the outlook for U.S. stocks in 2018.

U.S. stocks hit a new high, while the Canadian dollar and Mexican peso scored gains after a report of progress in negotiations over the North American Free Trade Agreement.

While the approaching Thanksgiving holiday gives traders a chance to pause, equities are heading into the end of the year near their peaks, with investors optimistic about global growth and company earnings. The S&P 500 Index briefly breached the 2,600 mark Tuesday, and ended the day at its highest level on record. Goldman Sachs Group Inc. raised its 2018 target for the index to 2,850 from 2,500, citing an expansion in profits and valuations.

“Investors can be reassured by the strength and durability of the current economic cycle,” Peter Oppenheimer, Goldman’s chief global equity strategist, said in a note. “While it has already been a long cycle, the unwinding of the financial crisis has also meant that, until recently, it has been sub-par in terms of strength -- as is often the case following financial crises.”

The loonie rose and the peso hit a five-week high after Juan Pablo Castanon, head of Mexico’s business chamber, said in an interview that negotiators were close to finishing work on telecom, energy and digital commerce provisions of Nafta. The dollar declined. The euro climbed after dropping the most in three weeks the day before.

Gilts advanced amid reports Prime Minister Theresa May has the backing of ministers to offer the European Union more money to break the Brexit deadlock. West Texas crude gained while gold rose after Monday’s big decline.

Officials have said the European Central Bank is likely to make multiple small adjustments to its guidance on monetary policy next year rather than any major change in language as it ends quantitative easing. Political developments in Germany are being closely watched even though some have concluded that economic growth won’t be threatened by the collapse in talks between Angela Merkel and potential coalition partners. The German Chancellor said she would prefer new elections if she can’t put together a majority.

The Stoxx Europe 600 Index advanced and German shares outperformed. The MSCI Emerging Market Index reached its highest in more than six years.

Earlier, stocks in Asia recovered some of their recent losses, with Chinese equities rallying as investors reassessed a crackdown on shadow banking that had shaken confidence. The Australian dollar dropped to a five-month low after suggestions from the central bank that interest rates will stay lower for longer. Turkey’s lira hit a record low against the dollar but pared some of the drop after its central bank tightened liquidity.

Terminal users can read more in our Markets Live blog.

Here are some key events coming up this week:

  • Minutes from the European Central Bank’s October meeting due on Thursday could show dissent in the discussion about tapering.
  • In Asia, Singapore 3Q GDP is due on Thursday. New Zealand October trade and South Korea November consumer confidence are due later in the week.
  • Reports on sales of previously owned homes and durable goods orders for October are due in the U.S.
  • The minutes from the Fed’s latest policy meeting are out on Wednesday.
  • The U.K. announces its budget Wednesday.
  • Argentina, Hungary, Kenya, Nigeria and South Africa set monetary policy this week.

These are the main moves in markets:

Stocks

  • The S&P 500 Index climbed 0.65 percent to close at 2,599.03.
  • The Stoxx Europe 600 Index advanced 0.4 percent.
  • The U.K.’s FTSE 100 Index increased 0.3 percent.
  • Germany’s DAX Index jumped 0.8 percent.
  • The MSCI Emerging Market Index increased 1.3 percent to the highest in more than six years.


Currencies

  • The Bloomberg Dollar Spot Index fell 0.2 percent.
  • The euro increased 0.1 percent to $1.174.
  • The British pound climbed less than 0.05 percent to $1.324.
  • The Mexican peso jumped 1.1 percent to 18.7962 per dollar; the loonie gained 0.3 percent to C$1.2782 per U.S. dollar.


Bonds

  • The yield on 10-year Treasuries fell one basis point to 2.36 percent.
  • Germany’s 10-year yield fell one basis point to 0.35 percent, the lowest in almost two weeks.
  • Britain’s 10-year yield decreased two basis points to 1.274 percent.


Commodities

  • West Texas Intermediate crude rose 0.9 percent to $56.90 a barrel.
  • Gold increased 0.3 percent to $1,280.25 an ounce.
  • Copper gained 1.2 percent to $6,909 a ton.

— With assistance by Adam Haigh, Fercan Yalinkilic, and Cormac Mullen

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