U.S. Stocks, Bonds Rise as Health Bill Captivates

U$27 Trillion Locked In Bear MarketsA trader holds a fixed line telephone as he monitors financial information on computer screens on the trading floor at Panmure Gordon & Co. in London, U.K., on Friday, Jan. 22, 2016. Photographer: Chris Ratcliffe
  • U.S. Stocks, Bonds Rise as Health Bill Captivates

U.S. stocks pared the worst weekly drop of the year, while Treasuries and the dollar continued to churn in a tight range as investors watched developments in Washington to gauge the prospects for the Trump administration’s legislative agenda. Oil rose for the first time this week.

The S&P 500 Index advanced as the White House doubled down on its demand that House Republicans vote Friday on the health-care bill without further changes. Technology shares paced gains. The yield on 10-year Treasury held near 2.41 percent, while the dollar churned in a tight range. The yen halted its longest rally since 2011. Oil gained as OPEC members prepared to meet for a review of production cuts.

“No one has any idea what’s going to happen with this vote so they are sitting there waiting for actual information rather than theory,” said Ben Kumar, a London-based investment manager at Seven Investment Management, which oversees about 10 billion pounds ($12 billion). “In general you can ignore the politics and trade on the underlying fundamentals. The market is still fundamentally intact.”

Reflation trades sparked by Trump’s election have faltered in March as the administration remains far from delivering on pro-growth policies that boosted stocks and the dollar. The White House demanded a vote Friday and threatened to move on to other policy priorities, including tax reform.

Here are the main moves in markets:

Stocks

  • The S&P 500 climbed 0.3 percent to 2,352.67 at 10:36 a.m. in new York. The index is down 1.1 percent in the five days, poised for its worst week of the year.
  • The Stoxx Europe 600 Index fell 0.3 percent, trimming the previous day’s brisk gains. Aegon NV weighed down insurers after it cut its Solvency II ratio.
  • Japan’s Topix trimmed some losses for a week that included the biggest one-day drop since Trump’s election. The index finished with a 1.4 percent decline for the week. The MSCI Asia Pacific fared better, with a 0.1 percent decrease.

Currencies

  • The Bloomberg Dollar Index was little changed as it heads for a weekly slide of 0.6 percent. The measure Thursday eked out a gain to snap a six-day losing streak.
  • The British pound weakened 0.3 percent to $1.2479, while the euro added 0.1 percent to $1.0797.
  • The Mexican peso has rallied about 9 percent versus the dollar this year, setting up for the best first quarter performance in more than two decades.

Bonds

  • U.S. Treasuries were little changed after erasing overnight declines. Yields were within a basis point of Thursday’s closing level.
  • Ten-year yields remained pinned between the average price over the past 50 days and the 100-day moving average for a third straight day.
  • European bonds shrugged off stronger-than-expected purchasing managers data out of Germany and France. French 10-year yields dropped four basis points to 1.001 percent.
  • The yield on bund benchmarks fell two basis points to 0.413 percent.

Commodities

  • Crude prices headed for a weekly loss as OPEC and its market allies prepared to review cuts, while rising U.S. inventories indicated the measures aren’t working yet.
  • West Texas Intermediate fell 0.2 percent Friday to $47.63 a barrel, pushing the weekly loss to 2.5 percent.
  • Gold futures were little changed at $1,250.90, holding the week’s gain at 1.4 percent.
  • Iron ore futures in China posted an unprecedented weekly loss; the most-active contract in Singapore is lower for a sixth day; and spot prices had the biggest slump since November.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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