U.S. Stocks, Oil Rise as Dollar Slips Before Fed

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, Oil Rise as Dollar Slips Before Fed

U.S. stocks edged higher as crude rebounded from a November low, while Treasuries advanced and the dollar slipped before the Federal Reserve’s anticipated rate increase.

Energy shares led gains in the S&P 500 Index as West Texas Intermediate oil jumped above $48 a barrel after an industry report pointed to falling crude stockpiles. A broader recovery of commodities spurred the Stoxx Europe 600 Index higher, with miners driving many of the gains. The dollar slipped versus most major peers and 10-year Treasury rates slipped to 2.58 percent.

The swings in oil added some drama to financial markets that have entered a two-day period brimming with central bank decisions, European political drama and a raft of economic data. With the Fed seen as all but certain to raise rates, investors have been weighing how precarious energy prices will feed into the central bank’s path for future moves.

“If you’re excited about whether Fed Chair Janet Yellen will say anything about the number of hikes this year, I think you will be disappointed,” Henrik Drusebjerg, chief strategist at Carnegie Investment Bank AB said in an interview with Bloomberg Radio’s Nejra Cehic and Markus Karlsson. “The Fed has come to use a new term that they will use the window when they have it. If the economy is strong, they will continue hiking.”

What investors will be watching:

  • The Fed’s decision will be announced at 2 p.m. in Washington, followed by Yellen’s news conference a half hour later. Investors are focused on any hints of a change in the number of increases the central bank foresees this year.
  • Wednesday’s vote in the Netherlands will deliver a reading on the state of populism in Europe as races in France and Germany heat up.
  • The Bank of Japan is set to keep its rates and yield-curve policy unchanged in its policy decision on Thursday. The Bank of England, Swiss National Bank and Bank Indonesia are also expected to stand pat with policy decisions.
  • U.S. Secretary of State Rex Tillerson travels to Japan, South Korea and China in his first visit to the region since taking office.
  • U.S. President Donald Trump’s first budget outline for fiscal 2018 is expected on Thursday. He’s said he’ll seek a $54 billion boost in defense spending, paid for by an equal amount of cuts to non-defense agencies.

Here are the main market moves:

Stocks

  • The S&P 500 added 0.2 percent to 2,370.80 at 9:31 a.m. in New York.
  • Energy producers climbed 0.4 percent after sinking more than 2 percent Tuesday.
  • The Stoxx Europe 600 Index added 0.3 percent as mining companies rallied 1.5 percent as a group.

Commodities

  • WTI gained 1.6 percent to $48.48. U.S. inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report.
  • Gold futures slipped 0.2 percent to $1,200 an ounce in New York.

Currencies

  • The Bloomberg Dollar Spot Index slipped by 0.2 percent and dropped against all but two of its major peers.
  • The British pound led G10 currencies with a gain of 0.4 percent, but pared an earlier advance after wage growth slowed. A YouGov poll for The Times showed that 57 percent of Scottish voters want to remain inside the U.K. compared to 43 percent who seek independence.
  • The euro rose by 0.2 percent to $1.0627, following its 0.5 percent drop a day earlier.

Bonds

  • The yield on 10-year Treasury notes fell three basis points to 2.577, after slipping three basis points in Tuesday trading.
  • Dutch bond yields fell as voters head to the polls in the Netherlands, with five and 10-year benchmarks outperforming bunds by one-to-two basis points.

Asia

  • Stocks in Asia were mixed. Hong Kong shares pared declines as Chinese Premier Li Keqiang played down the risk of a trade conflict. Speaking at a press conference after the close of the annual National People’s Congress, Li said it’s important for both China and the U.S. to keep talking to build trust.

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.

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