Stocks Climb to Record as Bonds Rise, Dollar Drops: Markets Wrap - swissinfo.ch

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U.S. stocks surged to a record, while sovereign bonds worldwide extended gains and the dollar slumped as the Federal Reserve’s dovish shift reverberated through global markets. Gold rose to the highest in more than five years.

The benchmark S&P 500 Index pared its all-time high after President Donald Trump tweeted that Iran made “a big mistake” in shooting down a U.S. drone. Crude surged almost 5%. The 10-year U.S. Treasury yield at one point dropped below 2% for the first time since November 2016 on the prospect of easier monetary policy in the world’s biggest economy.

“As the central bank’s dovish messaging continues to drive interest rates lower, it’s inoculating investors from other risks,” said Alec Young, managing director of global markets research at FTSE Russell.

The Stoxx Europe 600 Index was boosted by gains in technology and energy shares. Emerging-market assets surged, and credit spreads slid. In Asia, Chinese shares jumped ahead of FTSE Russell index changes next week. The yen and the Topix Index advanced after the Bank of Japan kept rates unchanged, and offered no further signal of easing.

Traders are now pricing in a virtual certainty the U.S. central bank will cut rates by July, Fed fund futures show. Seven of 17 Fed officials now think it will be appropriate to lower the benchmark overnight rate by a half-percentage point by the end of the year, according to updated projections published Wednesday. Fed Chairman Jerome Powell cited “uncertainties” in the outlook that have increased the case for a rate reduction as officials seek to prolong the near-record American economic expansion.

Elsewhere, West Texas oil jumped above $56 a barrel after Iran said it shot down an American drone, an act the U.S. said was unprovoked on a surveillance aircraft operating in international airspace. Silver, platinum, copper and iron ore paced gains in metals.

Meanwhile, the Norwegian krone surged after the country’s central bank raised its benchmark rate and said it will likely do so again this year. The pound trimmed some gains as the Bank of England kept policy unchanged but said the perceived risk of Britain crashing out of the European Union without a deal had risen. The lira pared a gain as Turkish President Recep Tayyip Erdogan criticized his country’s interest rate policy.

These are the main moves in markets:

Stocks

• The S&P 500 Index rose to a record 2,956.20, before trading up 0.8% as of 10:30 a.m. New York time. The Nasdaq Composite Index gained 0.9% and the Dow Jones Industrial Average increased 0.8%.
• The Stoxx Europe 600 increased 0.7% to the highest in about seven weeks.
• The MSCI Emerging Market Index surged 1.7% to the highest in more than six weeks.
• The MSCI Asia Pacific Index climbed 1.4% to the highest in more than six weeks.

Currencies

• The Bloomberg Dollar Spot Index declined 0.6%, to the lowest in at least 12 weeks.
• The euro rose 0.7% to $1.1303, the strongest in more than a week.
• The yen strengthened 0.4% at 107.65 per dollar, the strongest in more than five months.
• The British pound increased 0.4% to $1.2686, the strongest in more than a week.
• The MSCI Emerging Markets Currency Index rose 1%.

Bonds

• The yield on 10-year Treasuries fell 2 basis points to 2.01%.
• Germany’s 10-year yield eased 3 basis points to -0.32%.
• Britain’s 10-year yield declined 4 basis points to 0.82%, after touching the lowest level in almost three years.

Commodities

• West Texas Intermediate rose 4.9% to $56.37 a barrel, the highest in about three weeks.Gold increased 1.5% to $1,381 an ounce, the highest in almost six years.
• The Bloomberg Commodity Index jumped 1.8%.

--With assistance from Sarah Ponczek.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

©2019 Bloomberg L.P.

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https://www.swissinfo.ch/eng/stocks-to-test-record-as-bonds-rise--dollar-slumps--markets-wrap/45044050

2019-06-20 12:13:00Z
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