Stocks Bounce Back; Dollar, Treasuries Steady: Markets Wrap

Joshua Roberts („Reuters“ / „Scanpix“) nuotr.

Stocks recovered some of their recent losses as traders put on hold concerns about U.S. tax reforms and European political issues in a holiday-shortened week in America. Treasuries and the dollar were little changed.

A measure of Asian equities looked set to retest decade highs as stocks in Tokyo and Hong Kong outperformed. Chinese stocks rallied, led by financial companies, as investors reassessed warnings about excessive gains and a crackdown on shadow banking that had shaken confidence. Volumes are likely to be suppressed this week with the U.S. Thanksgiving holiday on Thursday.

Turkey’s lira weakened to a record low against the dollar as investors dismissed the central bank’s latest measures to support the currency and called for higher borrowing costs. The dollar was little changed from the previous session when it rose for the first time in five days. The Australian dollar dropped to a five-month low after suggestions from the central bank that interest rates will stay lower for longer. Gold held on to most of its biggest drop since September after the dollar’s gains sent precious metal prices including silver and platinum lower. Oil recouped losses to head back toward a two-year high.

The equity gains offer some relief after global stocks fell from record highs for five straight days to last Thursday as investors became wary of stretched valuations and scant progress on U.S. tax cuts that would boost the world’s largest economy. While the Thanksgiving holiday gives traders an excuse to pause, equities are heading into the end of the year near their peaks with investors optimistic about global growth and company earnings.

Federal Reserve Chair Janet Yellen said she will step down from the board of governors after Jerome Powell has been sworn into office. Her decision will give President Donald Trump a fourth spot to fill on the Fed’s seven-person board, including a vice chairman spot. The Fed minutes are due on Wednesday, which will allow investors to gauge officials’ eagerness to boost interest rates next year.

In Europe, investors continue to watch political developments in Germany even though markets concluded that economic growth won’t be threatened by the collapse in talks between German Chancellor Angela Merkel and potential coalition partners. Merkel said that she’s skeptical about forming a minority government and would prefer new elections if she can’t put together a majority.

Australia’s central bank, in the minutes from its November board meeting, signaled less confidence in the outlook for wages, despite faster full-time hiring, suggesting interest rates may remain at a record low for longer.

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

Euro Stoxx 50 futures fell 0.1 percent in early European trading. S&P 500 Index futures were little changed. The underlying measure increased 0.1 percent, following two down weeks, although it gave up some of the gains late in the session ahead of news that the U.S. is suing to block AT&T Inc.’s proposed takeover of Time Warner Inc. Japan’s Topix index gained 0.7 percent at the close in Tokyo as did the Nikkei 225 Stock Average. Australia’s S&P/ASX 200 Index was up 0.3 percent. The Kospi index in Seoul rose 0.1 percent. Hong Kong’s Hang Seng Index climbed 1.4 percent, and the Shanghai Composite Index was up 0.5 percent. The MSCI Asia Pacific Index rose 0.7 percent, close to the highest since 2007 hit on Nov. 9.

Currencies

The yen was up 0.1 percent at 112.51 per dollar after it retreated from a one-month high. The Australian dollar was down less than 0.1 percent at 75.48 U.S. cents. It fell as low as 75.32, the weakest since June. The euro rose 0.1 percent to $1.1742. The Bloomberg Dollar Spot Index fell 0.1 percent. It rose for the first time in five days in the previous session. The Turkish lira fell 0.6 percent to 3.95 per dollar.