Stocks Rally as Politics Ease; Treasuries Slip: Markets Wrap


Stocks headed for a positive end to a tumultuous week in which political developments in Europe and escalating trade tensions roiled markets. Treasuries edged lower and the dollar was steady as the focus shifted to U.S. jobs data due Friday.

The Stoxx Europe 600 gauge headed for the biggest gain in a month, led by banks and basic-resources stocks, while S&P equity-index futures pointed to a higher U.S. open. Italy’s benchmark index rallied the most since the end of February as populist parties surged to power, bringing to an end a three-month political deadlock though opening the way to a period of friction with Europe.

The risk-on mood prevailed even as U.S. President Donald Trump’s administration pushed ahead with tariffs on imports from its key trading partners. German bunds led a drop in core European debt, though Italian bonds gained along with those of peripheral European nations. Spanish assets rallied after Prime Minister Mariano Rajoy was ousted by opposition parties, opening the way for Socialist leader Pedro Sanchez to take over. The euro edged lower.

Investors remain optimistic that threats of more international tariffs will not materialize into an all-out trade war between the U.S. and its key partners, while the latest developments in Italy and Spain also removed uncertainty, providing some well-needed relief within Europe. Friday’s U.S. jobs report may show payrolls rising and the unemployment rate holding at the lowest since 2000, bolstering confidence in the Federal Reserve’s policy-tightening path.

St. Louis Fed President and CEO James Bullard discusses the tariffs between the U.S. and its allies.

Source: Bloomberg

Oil was steady as rising U.S. output overshadowed a surprise decline in crude stockpiles, with traders also focused on whether Saudi Arabia and Russia will boost production.

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Terminal users can read more in Bloomberg’s Markets Live blog.

These are some key events to watch this week:

  • The U.S. employment report for May is due Friday. It’s the last before the June Fed meeting.
  • Automakers report May U.S. sales the same day.
  • Also Friday: some onshore Chinese stocks join MSCI Inc.’s global indexes.
  • On Saturday U.S. Secretary of Commerce Wilbur Ross will travel to Beijing for more talks with Vice Premier Liu He on topics including ZTE Corp. and trade.

These are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index gained 0.9 percent as of 10:12 a.m. London time, the largest rise in five weeks.
  • The U.K.’s FTSE 100 Index rose 0.6 percent.
  • Italy’s FTSE MIB Index climbed 2.7 percent on the largest increase in more than 16 weeks.
  • Spain’s IBEX Index increased 1.5 percent, the biggest climb in eight weeks.
  • Futures on the S&P 500 Index climbed 0.4 percent.

Currencies

  • The euro declined 0.1 percent to $1.1679.
  • The British pound decreased less than 0.05 percent to $1.3292.
  • The Japanese yen fell 0.3 percent to 109.19 per dollar, the biggest fall in more than two weeks.
  • The Bloomberg Dollar Spot Index increased 0.1 percent.

Bonds

  • The yield on 10-year Treasuries climbed two basis points to 2.88 percent.
  • Britain’s 10-year yield increased four basis points to 1.266 percent.
  • Italy’s 10-year yield sank 24 basis points to 2.555 percent, the lowest in a week.
  • Spain’s 10-year yield fell six basis points to 1.448 percent, the lowest in more than a week.
  • Germany’s 10-year yield rose four basis points to 0.38 percent.
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Commodities

  • Gold climbed 0.1 percent to $1,299.26 an ounce.
  • West Texas Intermediate crude gained 0.3 percent to $67.27 a barrel.
  • Brent crude increased 0.1 percent to $77.67 a barrel.

— With assistance by Cormac Mullen



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