Equity Gains Spread After Yellen; Dollar Slides: Markets Wrap
Asian equities and currencies advanced with U.S. index futures and government bonds after Janet Yellen signaled the Federal Reserve won’t rush to tighten monetary policy. The dollar weakened for a fourth straight day, with a gauge of the currency hitting a 10-month low.
Standout stock markets included Seoul’s Kospi Index and the MSCI ACWI Index, which both hit record highs, while Hong Kong’s Hang Seng Index was the strongest in two years after the Dow Jones Industrial Average closed at an all-time high. South Korea’s central bank held its benchmark rate, as expected, while Chinese exports grew more than forecast as global demand proved resilient. Australian sovereign debt followed gains in Treasuries after Yellen expressed confidence in the U.S. economy and signaled monetary tightening would be gradual. Oil held above $45 a barrel. Canada’s dollar gained after the first rate hike there in seven years.
“The market is upbeat as Yellen’s comments suggest a slower pace of rate increases and that bodes well for liquidity conditions and stocks,” said Banny Lam, head of research at CEB International Investment Corp. in Hong Kong.
Yellen’s testimony diverted attention from Donald Trump Jr.’s emails about his meeting with a Russian lawyer, though concern remains that the latest saga in Washington may waylay efforts to reform taxes and boost spending. The Fed chair’s gradualist tone on policy came after signals from central banks around the world that accommodative policies may no longer be needed as the global economy strengthens.
Here’s what investors are watching:
Yellen will continue testifying Thursday. U.S. CPI reading is due Friday. JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. report results this week. The U.K. is due to publish its Repeal Bill on EU membership this week. China’s exports rose 11.3 percent in June, up from 8.7 percent in May and beating forecasts for 8.9 percent growth. Imports rose 17.2 percent.
These are the main moves in markets:
Stocks
Euro Stoxx 50 futures were little changed and S&P 500 futures were up 0.1 percent as of 7:30 a.m. U.K. time. The S&P 500 advanced Wednesday to just 0.4 percent shy of its closing record. The Dow Jones Industrial Average rose 123 points to a record 21,532. FTSE100 futures were little changed after the underlying index climbed 1.2 percent the previous day, the most since April 24. The MSCI ACWI Index, which includes emerging and developed world markets, rose 0.2 percent to a record high. Hong Kong’s Hang Seng Index climbed 1 percent and was its highest since July 2015. A gauge of Chinese companies listed in Hong Kong jumped 1.5 percent, while the Shanghai Composite Index gained 0.6 percent. Japan’s Topix index was steady after fluctuating. Australia’s S&P/ASX 200 Index and South Korea’s Kospi both strengthened 1.1 percent. Futures on the S&P 500 were up 0.1 percent.
Currencies
The yen strengthened 0.2 percent to 112.99 per dollar, after climbing 0.7 percent Wednesday in its biggest gain for more than a month. The Korean won rose 0.8 percent, the most since May 25, to 1,136.35 per dollar. The U.S. dollar was down against all G-10 peers. The Bloomberg Dollar Spot Index fell 0.2 percent to its lowest since September 2016. The gauge has lost 0.8 percent this week. The Canadian dollar rose 0.2 percent after jumping 1.3 percent Wednesday. The pound also gained 0.2 percent and the euro was up 0.3 percent. The Brazilian real jumped 1.4 percent Wednesday after former President Luiz Inacio Lula da Silva was convicted of graft and money-laundering.
Commodities
Wheat for September delivery on the Chicago Board of Trade dropped 1.9 percent to $5.28 a bushel, down a second day. The U.S. Department of Agriculture said domestic production will be greater than analysts expected. West Texas Intermediate crude was down 0.2 percent at $45.39 a barrel. It climbed 1 percent the previous session after data showed crude inventories fell 7.56 million barrels last week. Gold added 0.2 percent to $1,222.93 an ounce, a fourth day of gains.
Rates
The 10-year U.S. Treasury yield slid for a fourth day, down one basis point to 2.31 percent. The yield on Australian government notes with a similar maturity dropped three basis points to 2.69 percent.
