The Stoxx Europe 600 Index took its cue from higher Asian equities to advance for a second day. The yield on 10-year Treasuries climbed for a second day and held above 2.9 percent. Metal prices were mixed, while South Africa’s rand traded at its strongest level in almost three years after President Jacob Zuma resigned. The dollar dropped against most major currencies.
According to Bloomberg, stock investors brushed off a report showing U.S. consumer prices rose in January more than projected even as bond traders increased their expectations for the number of Federal Reserve interest-rate hikes to four by the end of next year. The inflation figures and the dollar’s drop gave rise to investor debate on the breakdown in the greenback’s correlation to interest rates, as currency investors focused instead on the U.S.’s twin deficits.
Stocks remain cheap relative to bonds and won’t be affected by higher long-term interest rates as long as the 10-year Treasury yield stays below 4 percent, according to Gina Martin Adams and Peter Chung, equity strategists at Bloomberg Intelligence.
Japan’s Finance Minister Taro Aso’s comments that the yen’s strength is not abrupt enough to require intervention supported the Japanese currency’s rally. Hong Kong equities sealed their best three-day run in more than two years in shortened trading ahead of the Lunar New Year holiday. China, South Korea, Taiwan, Vietnam markets are closed Thursday.
Here are some important things to watch out for this week:
- A handful of European Central Bank officials are due to speak Thursday and Friday.
- Earnings season continues in full swing.
- Lunar New Year celebrations for the Year of the Dog begin, affecting China, Hong Kong, Taiwan, Singapore, Malaysia and Indonesia. Chinese mainland markets are closed Feb. 15-21.
These are the main moves in markets:
Stocks
- The Stoxx Europe 600 Index climbed 0.7 percent as of 8:37 a.m. new york time, the highest in more than a week.
- Germany’s DAX Index gained 0.6 percent to the highest in more than a week.
- The MSCI All-Country World Index advanced 0.6 percent, hitting the highest in almost two weeks with its fifth consecutive advance.
- Futures on the S&P 500 Index increased 0.4 percent, reaching the highest in almost two weeks on its fifth consecutive advance.
Currencies
- The Bloomberg Dollar Spot Index declined 0.2 percent, hitting the lowest in two weeks with its fifth straight decline.
- The euro gained 0.3 percent to $1.2484, reaching the strongest in two weeks on its fifth straight advance.
- The Japanese yen climbed 0.5 percent to 106.53 per dollar, the strongest in about 15 months.
- The British pound jumped 0.6 percent to $1.4078, the strongest in almost two weeks.
- South Africa’s rand advanced 0.4 percent to 11.6652 per dollar, the strongest in about three years.
Bonds
- The yield on 10-year Treasuries increased two basis points to 2.92 percent, the highest in more than four years.
- Germany’s 10-year yield gained two basis points to 0.78 percent, the highest in more than two years on the largest gain in more than a week.
Commodities
- West Texas Intermediate crude fell 0.3 percent to $60.43 a barrel.
- Gold increased 0.2 percent to $1,353.72 an ounce, the highest in more than three weeks.
- Copper fell 0.3 percent to $3.23 a pound.