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Stocks started the year on the front foot, building on strong gains for many asset classes in 2019 as investors cheered the latest policy move by China’s central bank to support its economy. Treasuries slipped.
The Stoxx Europe 600 Index advanced for the first session in three, pulled higher by banks and car makers, and contracts on the main U.S. equity benchmarks all rose in the wake of one of the best years for American stocks in the past decade. Gauges in Hong Kong and Shanghai jumped more than 1% after the People’s Bank of China said it will increase the supply of cheap funding to banks, in line with market expectations. The yuan showed little reaction.
The euro held steady even as data showed the region’s manufacturing downturn deepened in December. The dollar also drifted, while the pound weakened following its best quarter in a decade.
After a stellar 2019 across most major assets, focus now shifts to the year ahead. Thursday gave investors the latest read on Chinese manufacturing, with the Caixin PMI dipping slightly from its November level but remaining well in the expansionary zone. On the trade front, U.S. President Donald Trump earlier this week said he expects to sign the first phase of a deal with China on Jan. 15, though Beijing has yet to confirm the date.
“One of the biggest risks today may be that stocks have already priced in much of the good news,” said Bob Doll, the Chicago-based senior portfolio manager at Nuveen Asset Management. “Stock prices can still climb higher, but we don’t expect results anywhere near 2019.”
Investors are also keeping an eye on geopolitical tensions, including in North Korea, where Kim Jong Un said he was no longer bound by his pledge to halt major missile tests and would soon debut a “new strategic weapon.” In Baghdad, an Iran-backed Iraqi militia broke up its encampment outside the U.S. embassy after an attack on the compound threatened to spiral into a broader confrontation.
Elsewhere, crude oil futures edged higher with gold. The Thai baht fell as much as 1.8% overnight, its biggest drop since 2007, amid speculation the Bank of Thailand could be intervening to curb the currency’s strength.
Here are some events to watch for this week:
Federal Open Market Committee minutes will be released on Friday.U.S. ISM manufacturing is due Friday. The Institute for Supply Management’s PMI is forecast to show a contraction for a fifth straight month.
These are some of the most recent moves in major markets:
Stocks
Futures on the S&P 500 Index advanced 0.5% as of 9:22 a.m. London time.The Stoxx Europe 600 Index jumped 0.9%.The MSCI Asia Pacific Index climbed 0.3%.The MSCI Emerging Market Index gained 0.6%.
Currencies
The Bloomberg Dollar Spot Index was little changed.The euro was little changed at $1.1211.The British pound decreased 0.2% to $1.3223.The onshore yuan was little changed at 6.96 per dollar.The Japanese yen fell 0.1% to 108.82 per dollar.
Bonds
The yield on 10-year Treasuries jumped two basis points to 1.94%.The yield on two-year Treasuries increased one basis point to 1.58%.Germany’s 10-year yield increased one basis point to -0.17%.Britain’s 10-year yield jumped four basis points to 0.863%.Japan’s 10-year yield was unchanged at -0.011%.
Commodities
West Texas Intermediate crude advanced 0.4% to $61.29 a barrel.Iron ore climbed 1.4% to $92.60 per metric ton.Gold rose 0.2% to $1,520.38 an ounce.
--With assistance from Greg Ritchie and Adam Haigh.
To contact the reporter on this story: Yakob Peterseil in London at ypeterseil@bloomberg.net
To contact the editor responsible for this story: Sam Potter at spotter33@bloomberg.net
For more articles like this, please visit us at bloomberg.com
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2020-01-02 08:24:00Z
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