U.S. Stocks Climb Before Earnings; Bonds Decline: Markets Wrap

NEW YORK (Capital Markets in Africa) – U.S. equities advanced at the beginning of a busy week set to be dominated by the start of earnings season and the signing of a partial China trade deal. Bonds retreaded alongside the yen and gold.

The S&P 500 opened in the green after pulling back a from a record high set Friday. The Stoxx Europe 600 swung from a gain to a loss as automakers sank. The dollar edged higher and Treasuries fell across the curve as the completion of the first trade deal nears; President Donald Trump has said the U.S. and China will sign the accord on Wednesday.

“Our expectation is a solid earnings season — nothing extraordinary but nothing really terrible,” Kristina Hooper, chief global market strategist at Invesco, told Bloomberg TV. “The environment is so accommodative that it really is supportive of risk assets, including equities, even if we have a lackluster earnings season.”

The pound led declines among Group-of-10 currencies after another Bank of England official pointed to a potential vote for a U.K. interest-rate cut this month and data showed the economy unexpectedly shrank. Germany’s benchmark bund yield headed for the least negative closing level since May. The offshore yuan strengthened past 6.9 per dollar for the first time since July.

Earnings from some of the biggest U.S. banks kick off the season Tuesday, amid forecasts that overall corporate profits will show the smallest growth in three years.

“There is a good feeling about bank earnings this week,” said Mark Haefele, chief investment officer for UBS Global Wealth Management.

Kamal Sharma, global research director of G10 FX strategy at Bank of America, discusses the potential for an interest rate cut from the Bank of England.

Elsewhere, equities advanced in all major Asian markets except Japan, where there are a holiday and Australia. Oil fluctuated after last week posting its steepest loss since July.

Meanwhile, trading in stocks, bonds and currencies were suspended in the Philippines because the Taal volcano to the south of the capital is belching out ash. Taiwanese President Tsai Ing-wen won a landslide victory over a China-friendly challenger. Emerging-market stocks headed for the third day of gains.

Source: Bloomberg Business News