Stocks Gain With U.S. Futures Before Powell Speaks: Markets Wrap

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Stocks climbed in Europe and Asia alongside U.S. futures as investors pushed equity benchmarks to record highs before commentary from Federal Reserve Chairman Jerome Powell. Oil rose and Treasuries slipped.

The Stoxx Europe 600 Index jumped to an intraday record, led by travel shares. Contracts on the three main American gauges pared earlier gains but remained higher ahead of Powell’s testimony before Congress, where the Fed chair will likely give hints on monetary policy and how the expanding coronavirus outbreak from China is influencing policymakers. Benchmarks in Hong Kong and Seoul rose at least 1%, while the Shanghai market climbed for a sixth session. Japan was shut for a holiday.

Momentum came from the U.S., where the S&P 500 Index closed at a fresh all-time high. Takeover target Sprint Corp. soared more than 60% in the pre-market after T-Mobile US Inc. was said to be poised to win court approval for its $26.5 billion takeover. The dollar edged lower versus a basket of its major peers.

Investors have turned more bullish lately despite the novel flu-like epidemic, signaling confidence that central banks will act to shore up growth in the event of a global slowdown. San Francisco Fed President Mary Daly said Monday that the U.S. economy and policy were in a good place. Focus is also shifting to how companies are addressing the virus’s impact, with earnings due this week from firms such as Alibaba Group Holding Ltd., Credit Suisse Group AG and Airbus SE.

“At the margin, we have to consider that the rebound in growth we were expecting over 2020 may be either delayed or somewhat less vigorous than we were anticipating due to the impact of the virus,” Mark Robertson, head of multistrategy at Aviva Investors, said in an interview in Sydney. “But ongoing monetary policy support, especially what was delivered last year, a reduction in uncertainty around trade wars, should still be a tail wind.”

Elsewhere, oil futures clawed back some losses after hitting a one-year low in New York trading.

Here are some key events coming up:

Earnings season continues with reports including MGM Resorts International and Softbank on Wednesday; Thursday will bring Alibaba, Nissan, Credit Suisse, Airbus, Nestle and AIG.Fed Chairman Powell delivers his semiannual testimony on monetary policy in Congress on Tuesday and Wednesday; ECB President Christine Lagarde speaks at the European Parliament in Strasbourg Tuesday.Thursday sees a gauge of underlying U.S. inflation, the core consumer price index. It is forecast to increase to 0.2% in January, a faster pace than in December.China and the U.S. on Friday lower tariffs on billions of dollars of respective imports as part of the trade deal signed last month.

These are the main moves in markets:

Stocks

The Stoxx Europe 600 Index advanced 0.6% as of 10:29 a.m. London time.Futures on the S&P 500 Index increased 0.2%.Hong Kong’s Hang Seng Index jumped 1.3%.The MSCI Asia Pacific Index gained 0.5%.The MSCI World Index of developed countries climbed 0.1%.

Currencies

The Bloomberg Dollar Spot Index declined 0.1%.The euro climbed 0.1% to $1.0917.The Japanese yen weakened 0.1% to 109.86 per dollar.The Turkish lira weakened 0.5% to 6.0434 per dollar.

Bonds

The yield on 10-year Treasuries increased two basis points to 1.59%.Germany’s 10-year yield gained three basis points to -0.39%.Britain’s 10-year yield advanced three basis points to 0.589%.Japan’s 10-year yield was unchanged at -0.055%.

Commodities

West Texas Intermediate crude gained 1.3% to $50.21 a barrel.Gold weakened 0.3% to $1,567.89 an ounce.LME aluminum increased 0.7% to $1,713.50 per metric ton.Iron ore jumped 4.4% to $83.30 per metric ton.

–With assistance from Andrew Cinko and Andreea Papuc.

To contact the reporter on this story: Todd White in Madrid at twhite2@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Yakob Peterseil

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