Stocks Rise as Dollar Slides Before Bankers Speak: Markets Wrap

Stocks advanced as a commodity rally boosted shares of raw-material producers. The dollar slipped against most major peers and bonds declined before Janet Yellen and Mario Draghi speak in Jackson Hole.

The Stoxx Europe 600 Index fluctuated before heading higher, led by miners. The Bloomberg Commodity Index was in the green for a third day, with crude heading back toward $48 a barrel as Hurricane Harvey headed for Texas, and industrial metals set for the longest run of weekly gains in more than a decade. Retailers dropped, led by Koninklijke Ahold Delhaize NV as Amazon.com Inc.’s entry into the European groceries market sparked fears of a price war. Sovereign debt fell across Europe.

Jackson Hole Bingo! Play Along to Avoid Jargon-Induced Lethargy

In a week when traders have had little to go on and the Northern Hemisphere summer has suppressed volumes, equity markets have struggled for traction as investors await the forum in Jackson Hole, Wyoming. Though European Central Bank President Draghi isn’t expected to offer a fresh policy message, his speech and that of Federal Reserve Chair Yellen will be parsed for clues on the timing of reductions in stimulus.

Meanwhile, two Fed officials offered opposing views Thursday on the inflation debate. Kansas City’s Esther George said another rate hike is feasible this year if U.S. data holds up. Dallas’s Robert Kaplan called for patience in waiting for prices to go higher. 

“Will financial-stability concerns prompt the Fed to hike, even when inflation is so low? This is what the market wants to know,” John Cairns, a strategist at Rand Merchant Bank in Johannesburg, wrote in a client note. “With little else to focus on, the market has morphed the symposium into a colossus. Risks are two-way: Yellen could take the hike off the table, or reaffirm it.”

Beyond the gathering of central bankers, market risks may be building in Washington. President Donald Trump took to Twitter to fuel the debate on legislation to keep the U.S. government open next month. Trump blasted Republican leaders for ignoring his advice on raising the debt ceiling and creating a “mess.” Countering, House Speaker Paul Ryan said the borrowing limit will be raised. Rates on short-term Treasury bills spiked amid concern Congress and the White House may not act in time.

Terminal subscribers can read more on our Markets Live blog.

Among other key events looming this week:

  • Indian markets are closed for a holiday.
  • Yellen is scheduled to discuss financial stability at 10 a.m. New York time on Friday at the Kansas City Fed’s symposium in Jackson Hole. Draghi is set to speak at 3 p.m.

Here are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index increased 0.3 percent as of 11:38 a.m. in London.
  • The MSCI World Index of developed countries advanced 0.1 percent.
  • Futures on the S&P 500 Index climbed 0.2 percent.

Currencies

  • The euro increased 0.2 percent to $1.1824, the strongest in more than three weeks.
  • The Bloomberg Dollar Spot Index fell 0.2 percent.
  • The British pound gained 0.3 percent to $1.2838, the biggest rise in more than three weeks.
  • The Japanese yen declined 0.1 percent to 109.65 per dollar.

Bonds

  • The yield on 10-year Treasuries fell less than one basis point to 2.19 percent.
  • Britain’s 10-year yield climbed two basis points to 1.071 percent.
  • Germany’s 10-year yield increased three basis points to 0.40 percent.

Commodities

  • West Texas Intermediate crude gained 0.6 percent to $47.73 a barrel.
  • Gold advanced 0.1 percent to $1,288.09 an ounce.
  • Copper climbed 0.6 percent to $6,726.00 per metric ton, the highest in almost three years.

Asia

  • Japan’s Topix index closed 0.3 percent higher with volume on the gauge about 20 percent below its 30-day intraday average.
  • The S&P/ASX 200 Index in Sydney fluctuated before finishing little changed and South Korea’s Kospi index rose 0.1 percent. The Hang Seng Index in Hong Kong added 1 percent and the Shanghai Composite Index advanced 1.7 percent.
  • The MSCI Asia Pacific Index rose 0.2 percent.

— With assistance by Robert Brand, and Andreea Papuc

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