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Stocks Fall, Dollar Sinks as Politics Take a Toll: Markets Wrap


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U.S. stocks sank Friday and the euro climbed to its highest level against the dollar since January 2015 as investors assessed an investigation into U.S. President Donald Trump that may stall his economic agenda. European shares fell as the common currency’s rally weighed on carmakers and other exporters. Oil slumped after reports that OPEC supply increased this month.

All major U.S. equity gauges ended lower, with energy shares leading decliners in the S&P 500 Index. Industrials also struggled as General Electric Co. dropped 3 percent on the company’s warning that its earnings for the year will likely be at near the bottom of its projected range. The Bloomberg Dollar Spot Index hit a 14-month low.

Politics remained at the forefront in the U.S., with reports that special counsel Robert Mueller is expanding his investigation to include Trump’s business dealings and the president telling the New York Times that any digging into his finances would cross a red line. White House Press Secretary Sean Spicer resigned Friday as Trump named financier Anthony Scaramucci communications director.

The euro gathered momentum following Thursday’s comments by European Central Bank President Mario Draghi that policy makers in the fall will discuss unwinding quantitative easing. Rising hawkishness from the ECB has helped the euro rally from lows last seen near the start of the millennium, with investors expecting tapering to start in the new year and pricing in a 10 basis point rate hike by September 2018.

Read More: Dollar Bears Steal Spotlight From Draghi as Trump Probe Broadens

“Draghi tried to talk the euro down, even going so far as to suggest that ECB’s quantitative easing could be increased and prolonged,” said Yann Quelenn, a market strategist at Swissquote Bank SA. “But the currency markets were not buying Draghi’s line, and neither are we. Available bonds are too scarce, and turn to a taper is too clear to disguise.”

Read our Markets Live blog here.

Here are the main moves in markets:

Stocks

  • The S&P 500 closed down less than 0.1 percent at 2,472.52. The Nasdaq Composite Index also dropped less 0.1 percent, the Dow Jones Industrial Average declined 0.2 percent and the Russell 2000 Index slid 0.5 percent.
  • The Stoxx Europe 600 fell 1 percent, with automobile, construction and bank shares down. The gauge is heading for its first weekly drop in three.

Currencies

Bonds

  • The yield on 10-year Treasuries fell two basis point to 2.24 percent.
  • Benchmark yields in Germany and France dropped two basis points.

Commodities

  • West Texas Intermediate crude dropped 2.4 percent to 45.68 a barrel.
  • Copper advanced 0.8 percent to $6,004 a ton, leading a rally in industrial metals.
  • Gold rose 0.8 percent to $1,254.37 an ounce and was poised for its first back-to-back weekly advance since June 2.

    Read more: http://www.bloomberg.com/news/articles/2017-07-20/dollar-remains-weak-as-u-s-politics-steals-show-markets-wrap


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    U.S. Stocks Sink Most Since May, Treasuries Slide: Markets Wrap


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    U.S. equities fell the most in six weeks and a measure of market volatility spiked higher as investors grew uneasy amid a global cyberattack and a fresh setback to the Republican agenda in Washington. Treasuries plunged as Janet Yellen signaled the economy is robust enough to withstand higher interest rates.

    The Nasdaq 100 Index fell more than 1.7 percent to its lowest level since May 19, as investors continue to punish some of the year’s highest flyers and Alphabet Inc. got hit with a record antitrust fine in Europe. Selling accelerated as the Federal Reserve chair said some financial assets had become “somewhat rich” and Senate Republicans delayed a vote on health-care reform in a fresh hit to the Trump administration’s policy agenda, fueling speculation tax cuts and regulatory rollbacks may also take longer than anticipated.

    “Market participants may view health care legislation as stalling a move on taxes that could include a repatriation tax holiday,” said Jeffrey Kleintop, Charles Schwab Corp.’s chief global strategist.

    Yellen’s comments that the Fed remains on track to tighten even as economic data continues to fall short of estimates sent Treasury 10-year yields to the highest in two weeks. Financial shares advanced, but not enough to save the S&P 500 Index from its worst drop in six weeks. The CBOE Volatility Index jumped 12 percent. Yellen couldn’t boost the dollar though, as the greenback retreated to the lowest level in 10 months versus the euro after Mario Draghi said inflation in the region wouldn’t remain low.

    Some investors worry the Fed is taking too rosy a view as it sets the path for increasing borrowing costs, especially after weakness in data Monday added to concerns about the strength of growth. The International Monetary Fund sounded a similar alarm earlier Tuesday, cutting its growth forecast for the U.S. in part because of policy uncertainty. The latest cyberattack to disrupt global business didn’t disrupt financial markets in any noticeable way, but added to the cautious mood.

    “Yellen is expressing confidence that banking is stronger, economic growth is relatively firm and there’s not going to be a crisis in our lifetime,” said Dennis Debusschere, Evercore ISI’s head of portfolio strategy and quant. “It’s sending a signal that they can continue on rising rates, despite the weaker inflation we’ve seen. That’s where the concern is in the market.”

    Read our Markets Live blog here.

    Here are some important upcoming events:

    • China’s PMI might have declined in June after unexpectedly remaining unchanged in May, reflecting government offers to cut overcapacity and leverage. That reading is due Friday.
    • Also due this week: Japanese inflation, factory output, unemployment, household consumption and housing starts; rate decisions in Colombia, the Czech Republic and Armenia.

    These are the main moves in markets:

    Stocks

    • The S&P 500 lost 0.8 percent to 2,419.38 at 4 p.m. in New York. That’s the lowest since May 31.
    • The Nasdaq 100 dropped 1.8 percent, the most since a 2.4 percent rout on June 9. The index is at its lowest level since May 19. Alphabet Inc. dropped 2.5 percent after being hit with a record EU fine.
    • The Stoxx Europe 600 Index dropped 0.8 percent, as declines in travel and leisure shares overshadowed the rally in miners.

    Currencies

    • The euro surged 1.4 percent to $1.1336.
    • The Bloomberg Dollar Spot Index fell 0.5 percent after gaining 0.1 percent in the previous session.
    • The British pound added 0.6 percent to $1.2799. 

    Commodities

    • West Texas Intermediate crude rose 2 percent to settle at $44.24 a barrel, for a fourth day of gains that is the longest run in a month. Oil fell into a bear market last week.
    • Gold futures increased 0.3 percent to $1,250.40 an ounce. The precious metal sank almost 1 percent on Monday.

    Bonds

    • The yield on 10-year Treasuries rose six basis points to 2.20 percent, after dropping less than one basis point on Monday.
    • European government bonds dropped across the board, with the yield on benchmark French bonds climbing 14 basis points and that of Germany gaining 13 basis points.

    Asia

    • The Chinese yuan jumped both onshore and overseas amid speculation of central bank intervention.
    • Hong Kong’s Hang Seng index fell 0.1 percent and the Shanghai Composite Index advanced 0.2 percent. A string of small-cap Hong Kong stocks suddenly plunged during the day, with traders pointing to links between some of the companies and a brokerage that’s under regulatory investigation.
    • Japan’s Topix climbed 0.4 percent to the highest closing level since August 2015.

      Read more: http://www.bloomberg.com/news/articles/2017-06-26/small-gains-seen-for-asian-stocks-as-yen-weakens-markets-wrap


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      S&P 500, Nasdaq Composite Hit Records; Gold Climbs: Markets Wrap

      The dollar slid to an 11-month low and U.S. stocks clawed back earlier losses to reach record levels, as President Donald Trump’s economic revitalization agenda once again faltered. European shares dropped amid earnings disappointments, and gold rose to the highest level this month.

      The greenback lost ground against all but one of its G-10 peers on signs Trump’s health-care reform bill is effectively dead in its current form, after two more Republican senators announced their opposition to the plan. Sterling bucked the trend, slipping against the dollar as U.K. inflation unexpectedly slowed in June, while the euro surged ahead of this week’s ECB meeting.

      The S&P 500 Index rose slightly to reach an all-time high, while the Nasdaq Composite Index also climbed to a record close. The Stoxx Europe 600 Index fell following a grim earnings report from Ericsson AB. Iron ore futures hit their highest since May on strong demand from Chinese steel mills. 

      While many traders had already dialed back their expectations Trump will be able to execute his pro-growth policies, the apparent death of the health-care bill lent a risk-off tone to markets. Some notable investors have become less sanguine as global equities continue to trade near record highs.

      “Any hopes of dollar support from a successful vote on the Senate’s health-care bill look to be vanishing,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “Near term, the dollar path of least resistance is down. We still think the data — inflation in particular — will provide the Fed with enough ammunition to hike in December and boost the dollar, but this is a fourth-quarter story.”

      Read our Markets Live blog here.

      Here are some key upcoming events:

      • The European Central Bank meets Thursday. Bloomberg Intelligence expects no change then, and no rate hike before 2019. Reuters cited unidentified officials as saying the bank is keen to keep asset purchases open-ended.
      • The Bank of Japan is forecast to stand pat at its meeting Thursday.
      • Round two of Brexit talks is underway in Brussels.

      Here are the main moves in markets:

      Currencies and Bonds 

      • The Bloomberg Dollar Spot Index sank 0.5 percent to its weakest level since Aug. 19. 
      • The euro jumped 0.7 percent to $1.1556 amid the greenback weakness and speculation that the European Central Bank could signal its intent to scale back monetary stimulus at its meeting on Thursday.
      • The pound weakened 0.1 percent to $1.3044 after U.K. inflation unexpectedly fell in June.
      • The yield on 10-year U.S. Treasuries dropped six basis points to 2.26 percent after dropping five basis points last week.

      Stocks

      • The S&P 500 rose less than 0.1 percent to a record 2,460.61, reversing a loss of 0.4 percent earlier in the session. The Dow Jones Industrial Average declined 0.3 percent. The Nasdaq Composite Index gained 0.5 percent to reach an all-time high.
      • Europe’s Stoxx 600 Index dropped 1.1 percent as miners reversed Monday’s gains and Ericsson slumped.

      Commodities

      • Gold climbed 0.6 percent to $1,241.99 an ounce.
      • WTI crude jumped 1 percent to $46.48, erasing early losses.
      • Iron-ore futures surged 3 percent, extending a roughly 7 percent gain for the week.

      Asia

      • The Topix Index dropped 0.3 percent. It fell as much as 0.9 percent earlier after some officials at the Bank of Japan were reported to be increasingly concerned about the sustainability of its purchases of exchange-traded funds. More on that story here
      • Australia’s S&P/ASX 200 Index slid 1.2 percent. The Shanghai Composite Index and other mainland China markets erased losses and rose.
      • The Australian dollar returned to a two-year high after central bank minutes signaled optimism on economic growth and wages.

        Read more: http://www.bloomberg.com/news/articles/2017-07-17/nasdaq-futures-climb-as-profit-season-ramps-up-markets-wrap