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U.S. Stocks Climb Before Central Bank Decisions: Markets Wrap

Updated on
  • Dollar bounces back; Treasury yields rise; gold declines
  • Brexit vote roils pound; Turkish lira leads EM currency drop
Summit Seen Having No Impact on U.S. Economy, Fed

U.S. stock indexes finished higher in listless trading Tuesday as investors put the U.S.-North Korea meeting in the rear-view and looked forward to this week’s big central bank decisions.

Approaching the close, the S&P 500 Index recovered from session lows amid below-average volume. Yields on 10-year Treasuries climbed, while the dollar gained and the euro fell. Safe-haven assets including the yen and gold edged lower after President Donald Trump and Kim Jong Un signed a document pledging to work toward peace on the Korean peninsula.

The summit and last weekend’s rancorous G-7 meeting have yielded the spotlight to central banks, with a seemingly certain Federal Reserve rate increase on Wednesday, plus the prospect of a hawkish European Central Bank tilt on Thursday. The Bank of Japan’s policy decision is due Friday. Tuesday’s U.S. inflation figures -- which were in line with estimates -- may reignite the four-hikes-in-2018 debate ahead of the Fed’s decision.

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“The main issues are the Federal Reserve, the ECB and the Bank of Japan, not really the tweets regarding trade issues -- and that’s what we’re all waiting for,” Derek Green, wealth adviser at Titus Wealth Management in California, said by phone. “Maybe it’s a calm before the storm. Volume will definitely pick up starting tomorrow. You’ve got three press conferences in three days.”

The Stoxx Europe 600 Index retreated after modest gains for many Asian shares failed to ignite the MSCI Asia Pacific Index. The British pound rose after Prime Minister Theresa May fended off a rebellion by pro-EU Conservatives and won a key Brexit vote, only to give up most of that gain.

Read more: Investors React to Trump-Kim Deal

Elsewhere, West Texas crude fluctuated around $66 a barrel after Iraq joined other OPEC members in resisting a push to boost oil supplies. The Turkish lira led decliners in emerging-market currencies ahead of the possible U.S. rate increase, which could suck more cash from developing nations.

These are some key events to watch this week:

  • The Federal Reserve is expected to raise interest rates Wednesday as the U.S. economy remains solid.
  • The European Central Bank rates decision comes Thursday with a briefing from President Mario Draghi.
  • The Bank of Japan June monetary policy decision and news conference is Friday.
  • FIFA expects more than 3 billion viewers for the World Cup that begins this week in Russia.

And these are the main moves in markets:

Stocks

  • The S&P 500 Index climbed 0.2 percent as of 4:01 p.m. New York time.
  • The Stoxx Europe 600 Index fell 0.1 percent.
  • The U.K.’s FTSE 100 Index sank 0.4 percent.
  • Germany’s DAX Index declined less than 0.05 percent.
  • The MSCI Emerging Market Index fell 0.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index increased 0.3 percent to its highest in over a week.
  • The euro fell 0.3 percent to $1.175.
  • The British pound fell less than 0.05 percent to $1.3373.
  • The Japanese yen decreased 0.3 percent to 110.35 per dollar, the weakest in almost three weeks.

Bonds

  • The yield on 10-year Treasuries increased one basis point to 2.96 percent.
  • Germany’s 10-year yield fell less than one basis point to 0.49 percent.
  • Britain’s 10-year yield decreased one basis point to 1.401 percent.

Commodities

  • West Texas Intermediate crude climbed 0.2 percent to $66.22 a barrel.
  • Gold fell 0.3 percent to $1,296.19 an ounce, the largest fall in over a week.
  • LME copper fell 0.5 percent to $7,222 a metric ton.

— With assistance by Andreea Papuc, and Janine Wolf

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