Dollar Climbs; Europe Stocks, Futures Fluctuate: Markets Wrap - Bloomberg

The dollar strengthened, while European stocks and U.S. equity futures fluctuated as investors focused on comments from the Federal Reserve and European Central Bank about the outlook for monetary stimulus.

In Europe, governing council member Francois Villeroy de Galhau said the ECB will keep an easy stance for as long as needed, and U.S. investors took comfort from remarks by two Federal Reserve officials that pushed back on the possibility of tapering bond purchases anytime soon.

Federal Reserve Bank of St. Louis President James Bullard said getting through the pandemic remains the policy priority, a sentiment that was echoed by Boston Fed chief Eric Rosengren. That eased concern that the Fed might be headed for a repeat of the so-called taper tantrum in 2013, when the withdrawal of monetary stimulus unleashed volatility across financial markets.

“Coordinated comments from Fed governors” are helping to deflate bond yields, said Deutsche Bank AG strategists including Jim Reid in a note to clients. “We’ve only had seven business days this year and we’ve already had a full 360-degree tapering debate played out by the Fed.”

Europe’s Stoxx 600 was flat, with losses in banks and travel shares outweighing M&A announcements.

Among the day’s winners, French grocer Carrefour SA rallied 10% after Alimentation Couche-Tard Inc., the convenience-store giant that owns the Circle K chain, said it’s exploring a transaction. Telefonica SA also jumped 10% after American Tower Corp. said it would buy telecommunication towers in Europe and Latin America from the company.

General Motors Co. added 3.6% in U.S. pre-market trading. On Tuesday, GM announced plans to push into electric vehicles by creating a wholly owned company called BrightDrop that will supply battery-powered vans and offer fleet-management services.

In Japan, the Nikkei 225 outperformed, reaching a record in dollar terms. Equities also ticked up in South Korea, while Hong Kong shares were flat.

Oil futures in New York rose for a seventh session, climbing toward $54 a barrel in the longest run of gains since February 2019. The combination of an industry report pointing to another decrease in U.S. crude stockpiles, Saudi Arabia’s output cuts and a weaker dollar are all driving the run up in energy prices.

Here are some key events coming up:

• JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., as well as firms ranging from Taiwan Semiconductor Manufacturing Co. to Infosys Ltd., are among those due to report earnings.
• EIA crude oil inventory report is due Wednesday.
• European Central Bank’s Christine Lagarde speaks at an online conference Wednesday.
• U.S. consumer-price inflation figures are due Wednesday.
• U.S. President-elect Joe Biden plans to lay out proposals for fiscal support on Thursday.
• Federal Reserve Chairman Jerome Powell takes part in a webinar on Thursday.
• U.S. initial jobless claims data are due Thursday.
• U.S. retail sales, industrial production, business inventories and consumer sentiment figures are due Friday.

These are some of the main moves in markets:

Stocks

• Futures on the S&P 500 Index were little changed at 10:56 a.m. London time.
• The Stoxx Europe 600 Index was little changed.
• The MSCI Asia Pacific Index rose 0.5%.
• The MSCI Emerging Market Index climbed 0.5%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2% to 1,122.20.
• The euro decreased 0.2% to $1.2179.
• The British pound increased 0.1% to $1.3672.
• The Japanese yen weakened 0.2% to 103.94 per dollar.

Bonds

• The yield on 10-year Treasuries fell one basis point to 1.12%.
• The yield on two-year Treasuries increased less than one basis point to 0.15%.
• Germany’s 10-year yield decreased three basis points to -0.49%.
• Britain’s 10-year yield fell two basis points to 0.335%.

Commodities

• West Texas Intermediate crude gained 0.2% to $53.36 a barrel.
• Gold strengthened 0.1% to $1,855.23 an ounce.

— With assistance by Steve Matthews, and Vivien Lou Chen

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