BackGlobal stocks gain as treasuries rise before Yellen’s testimony
US stocks edged higher with global equities as bookmakers' odds indicated a growing probability Britons will vote to remain in the European Union
Premium
Hong Kong/London: The pound held near the highest level since January while US stocks edged higher with global equities as bookmakers’ odds indicated a growing probability Britons will vote to remain in the European Union. Treasuries rose before Federal Reserve chair Janet Yellen speaks on monetary policy.
The MSCI All-Country World Index headed for the highest close in almost two weeks as separate opinion polls showed leads for both the “Remain" and “Leave" campaigns two days before the vote. Sterling was little changed after its biggest two-day gain since 2008 while gold fell with the yen as haven demand eased. Treasuries halted a three-day decline before Yellen’s testimony to lawmakers.
Global equities have rebounded from a one-month low on Thursday as the likelihood for Brexit retreated even as recent polls shows the vote remains tight. Stocks and the pound dipped Tuesday morning after an IG/Survation poll showed a shrinking lead for “Remain." Yellen is expected to discuss the strength of the world’s largest economy just days after the Fed signalled a cautious approach to future rate hikes, scaling back its projections for the next two years.
“Right now the correlation between the implied odds for Brexit and the stock market move is pretty strong," said Ralf Zimmerman, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “We had seen a big jump yesterday on the back of Friday’s upwards move. Right now all eyes are on Brexit, on yes or no, and the market is trading on all the pieces of information geared on this issue."
Stocks
The MSCI AC World Index rose 0.1% at 9:36am in New York, after climbing 2.3% in the previous two days. The Stoxx Europe 600 Index added 0.4%, with banks rising for a third day, while miners followed commodity prices lower.
Kion Group AG slid 5.9% after German maker of forklifts agreed to buy warehouse-equipment company Dematic for about $2.1 billion. Whitbread Plc advanced 2.4% after saying it maintained sales growth in the first quarter as Costa Coffee shops and Premier Inns budget hotels performed better than analysts estimated.
The S&P 500 Index climbed 0.1%, after the index rose the most in almost four weeks on Monday.
Currencies
The pound added 0.2% to $1.4720, after reaching $1.4783. It surged 3.5% in the previous two days. Billionaire investor George Soros said sterling may slump more than 20% if British voters choose to leave the EU, a devaluation that would be bigger and more disruptive than when he profited by betting against the currency in 1992.
The Bloomberg Dollar Spot Index was little changed after falling 0.3%. The gauge had weakened every day since the Fed left interest rates unchanged last week and Yellen said Brexit was a factor in the decision.
The yen weakened 0.5%, after surging 3% over the last seven trading sessions, as a technical indicator -- the relative strength index -- reached a level that indicated a reversal was likely. Finance minister Taro Aso signalled that Japan’s government won’t intervene to stem the yen’s strength without due consideration
Commodities
The Bloomberg Commodity Index, which tracks returns on raw materials, is down 1.1%, as gold for immediate delivery declined 0.8%, extending Monday’s retreat from its highest close since January 2015.
West Texas Intermediate crude dropped 1.6% to $48.58 a barrel in New York, after rallying 6.8% in the last two sessions. US inventories probably fell by 1.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday.
Copper slid from a two-week high in London and nickel dropped 0.5%, after ending the last session at a six-week high.
US natural gas futures fell as much as 1.4% after settling Monday at a nine-month amid forecasts for unusually hot weather across the country through next week. The deadly heat hitting the Southwest states is set to ease from Tuesday.
Bonds
US 10-year treasuries advanced for the first time in four days, sending the yield two basis points lower to 1.67%. The rate jumped eight basis points on Monday, the biggest increase in a month.
“The Treasury market remains at the mercy of event risk," primarily the UK referendum Thursday, JPMorgan Chase & Co. analysts, including New York-based Jay Barry, wrote in a client note. In reaction to Yellen’s testimony, “we expect more muted yield moves, particularly given the market’s focus on global geopolitics," according to the note.
European government bonds fell, pushing German 10-year yields up one basis point to 0.06%, after touching 0.075%, the highest since 7 June. Bloomberg
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
