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U.S. Stocks Hit Record on Trade Hopes; Bonds Drop: Markets Wrap

Claire Ballentine
U.S. Stocks Hit Record on Trade Hopes; Bonds Drop: Markets Wrap

(Bloomberg) -- U.S. stocks climbed to a record as rising optimism for a trade deal with China combined with solid earnings and bets the Federal Reserve will cut rates. Treasuries slumped at the start of a a week packed with more results and central bank decisions.

The S&P 500 took out its July record after President Donald Trump said the U.S. is ahead of schedule to sign part of the trade deal. Microsoft jumped to an all-time high after winning a Pentagon contract, while AT&T climbed following a board shuffle. Tiffany surged after LVMH said it held discussions with the jeweler. PG&E plunged on liability risk from California wildfires. The Stoxx Europe 600 rose even as banks slipped after HSBC’s disappointing earnings. The 10-year Treasury yield hit a six-week high.

The week greeted investors with several doses of positive news, as the signs of progress joined with expectations for further monetary stimulus from the Fed after its Wednesday meeting. Corporate earnings continue to roll in with results topping estimates at a solid clip. Alphabet is set to release results after the close Monday.

“Equities are striding to new all-time highs as optimism is hitting investors from all directions,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

In the U.K., the pound steadied versus the euro after the European Union agreed to a Brexit deadline extension, easing the risk of leaving the bloc without a deal on Oct. 31. European bonds edged lower, while gilts were steady. An Asia-Pacific equities benchmark rose for the fifth gain in six sessions. Shares increased in Shanghai, with blockchain-related stocks climbing after Chinese President Xi Jinping hailed the technology.

Elsewhere, Argentine bonds fell after opposition candidate Alberto Fernandez secured victory in Sunday’s presidential election, with business-friendly incumbent Mauricio Macri conceding. WTI crude oil slipped after the biggest weekly advance in more than a month. Bitcoin jumped as much as 16% from Friday, before paring its gain by about one-half.

Here are some key events coming up this week:

Earnings include: Alphabet, Facebook, Pfizer, Airbus, Apple, Exxon Mobil, BP, PetroChina, Credit Suisse, Nomura and Macquarie Group.The Fed is expected to lower the main interest rate when policy makers decide on Wednesday. Futures have priced in about 23 basis points of reduction.U.S. economic growth is forecast to have slowed to 1.6% in the third quarter. GDP data are due Wednesday.The Bank of Japan sets policy on Thursday and Governor Haruhiko Kuroda will hold a news conference.Friday brings the monthly U.S. non-farm payrolls report.

These are some of the main moves in markets:

Stocks

The S&P 500 Index advanced 0.6% as of 4 p.m. New York time.The Nasdaq 100 jumped 1% to a record. The Dow Jones Industrial Average added 0.5%.The Stoxx Europe 600 Index added 0.3%.The MSCI All-Country World Index gained 0.3%.The MSCI Emerging Market Index jumped 0.7%.

Currencies

The Bloomberg Dollar Spot Index decreased 0.1%.The euro climbed 0.2% to $1.1101.The British pound rose 0.3 % to $1.2864.The Japanese yen slipped 0.3% to 108.98 per dollar.

Bonds

The yield on 10-year Treasuries advanced five basis points to 1.84%.The yield on two-year Treasuries advanced three basis points to 1.64%.Britain’s 10-year yield climbed four basis points to 0.722%.Japan’s 10-year yield climbed one basis point to -0.122%.

Commodities

West Texas Intermediate crude fell 1.5% to $55.80 a barrel.Gold futures decreased 0.7% to $1,494.80 an ounce.Palladium rose above $1,800 an ounce for the first time.

--With assistance from Adam Haigh and Robert Brand.

To contact the reporter on this story: Claire Ballentine in New York at cballentine@bloomberg.net

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

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