The dollar fell to a three-week low, spurring gains in commodities and emerging-market equities, while U.S. stocks fluctuated near a seven-week high.
The Bloomberg Dollar Spot Index, which measures the currency against a basket of 10 peers, retreated even after Federal Reserve officials continue to back the case for higher interest rates this year. Metals fueled resources gains, sending the Bloomberg Commodity Index to a two-month high. The yuan jumped the most since March, and speculation of additional stimulus boosted Chinese shares. Stocks in Europe halted a six-day run of gains.
Commodity prices have rebounded from a 16-year low in August, as China takes steps to revive its faltering economy and expectations for a U.S. interest-rate increase this year fade. Fed Vice Chairman Stanley Fischer became the latest policy maker to back the case for a year-end increase, joining William C. Dudley, Dennis Lockhart and John Williams. U.S. stocks were little changed after their best week of the year as investors await earnings reports for indications on the strength of the economy.
“As long as earnings are fair or better than the expectations, I think we’re going to be OK,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “All of sudden people are saying well, China’s not so bad. Emerging markets are coming back. Oil is coming back. I’m optimistic between now and year-end.”
Stocks
The Standard & Poor’s 500 Index fell less than 0.1 percent at 9:31 a.m. in New York. Trading volumes may be lower today due to the Columbus Day federal holiday. The U.S. bond market is closed. The equities benchmark jumped 3.3 percent last week has rallied 7.9 percent from its August low.
EMC Corp. climbed 2.6 percent after Dell Inc. offered to buy the data-storage provider in a deal worth about $67 billion. Some 35 S&P 500 companies are scheduled to report results this week, including Johnson & Johnson, Intel Corp. and JPMorgan Chase and Co.
The Stoxx 600 fell 0.5 percent, set to end its longest winning streak since July. Automakers bucked the decline on speculation China’s stimulus measures may boost car demand. RWE surged as much as 15 percent and EON climbed as much as 12 percent after Germany’s economy ministry said local utilities have enough funds to pay for the shutdown and cleanup of nuclear power plants as decommissioning moves a step closer.
Commodities
Bloomberg’s commodity index climbed 0.4 percent. The pickup is due to “the continuing realization that apocalyptic fears of the need for lower prices were misplaced,” said Paul Horsnell, head of commodities research at Standard Chartered Plc. Gold has seen “quite a big reversal of sentiment,” with softening views on the Fed and central banks in general, he said.
Oil futures slipped to $49.53 per barrel in New York, while Brent lost 0.2 percent to $52.51 in London.
Gold for immediate delivery rose to the highest level since Aug. 24, climbing 1 percent to $1,168.42 per ounce. Zinc gained 1.4 percent in London and copper rose 0.8 percent.Nickel advanced a fifth straight day in its longest rising streak since July 2014, increasing 2 percent.
Emerging Markets
The MSCI Emerging Markets Index gained 0.8 percent, heading for its highest close since Aug. 11. Russia’s ruble climbed 0.9 percent versus the dollar, as oil advanced.
The Shanghai Composite Index jumped 3.3 percent and the Hang Seng China Enterprises Index advanced 1.3 percent. The People’s Bank of China announced over the weekend it will expand a relending trial to nine more cities and provinces, while Premier Li Keqiang said the government will increase fiscal support for shantytown redevelopment.
The Shanghai Composite Index is rallying amid stimulus speculation following the National Day holidays.
Bloomberg
The yuan strengthened 0.35 percent, the most since March, as the central bank raised its fixing and signaled support for the currency. Taiwan’s dollar rose 0.9 percent, the biggest gain in more than four years, tracking the yuan. China is the island’s largest export market.
The Turkish lira fell as much as 1.8 percent following a terrorist attack that killed at least 97 people at a peace rally. Turkish bonds fell, sending the yield on two-year notes four basis points higher to 10.42 percent. The bombing in Ankara on Saturday marked an escalation in violence before parliamentary elections in November.
Bonds
Germany’s 10-year bund yield fell two basis points to 0.59 percent, after climbing 11 basis points last week. The yield on similar-maturity Spanish and Italian bonds was little changed.
All of the region’s five largest economies are due to hold bond sales this week and Portugal is set to auction bonds for the first time since July. The supply is close to 30 billion euros ($34 billion), almost 50 percent above the year-to-date weekly average, according to Commerzbank AG, which is ranked first among dealers by Germany’s debt agency.
Currencies
The New Zealand dollar added 0.5 percent to 67.19 U.S. cents after touching 67.39 cents, the highest since July. The South African rand rose 0.6 percent.
A gauge of the U.S. currency touched a three-week low even after Fischer became the latest policy maker to back the case for a year-end increase in the nation’s benchmark rate, joining William C. Dudley, Dennis Lockhart and John Williams.
The Bloomberg Dollar Spot Index, which measures the currency against 10 major counterparts, slipped 0.2 percent, after touching the lowest since Sept. 18. The U.S. currency weakened 0.1 percent to $1.1372 per euro and depreciated 0.1 percent to 120.11 yen.
source: Bloomberg
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