Tech Leads U.S. Stock Advance; Crude Oil Declines: Markets Wrap

(Bloomberg) --

U.S. equities gained, led by FANG shares, while European stocks pared losses following a mixed session in Asia as a big week for central-bank policy gets underway. Crude oil slumped for the first time in three days.

Facebook, Apple, Netflix and Google parent Alphabet led the Nasdaq Composite higher, while the Stoxx Europe 600 Index closed little changed. Deutsche Bank boosted lenders on reports that it’s considering creating a “non-core unit” to wind down legacy assets as part of a broader overhaul. Japanese and Australian shares declined, while equities in Hong Kong rose after the government suspended a controversial extradition bill.

The dollar briefly weakened after a Federal Reserve survey of factories in New York State plunged in June by the most on record, before climbing back from the day’s lows. Treasuries pared a drop on the news, but they stayed mostly lower alongside European bonds as investors looked ahead to a week in which the Fed, the Bank of Japan and the Bank of England all set monetary policy.

“We’ll find out Wednesday if the market is right about how dovish it is when it comes to monetary policy,” said Arthur Hogan, chief market strategist at National Securities Corp. “So what we’re looking for is affirmation of where the market is already, and anything that fails to affirm that probably is a negative toward the S&P 500.”

Investors will be scrutinizing the Fed’s decision and messaging on Wednesday for signals on the chances of rates cuts ahead. Meanwhile, U.S. Commerce Secretary Wilbur Ross reiterated that the prospect of a major trade deal is unlikely to emerge from a possible meeting between President Donald Trump and Chinese President Xi Jinping at the Group of 20 summit in Osaka this month.

“We know that the Fed doesn’t like to surprise people and the idea at this point of them digging in their heels and saying ’absolutely no cuts,’ I think is very unlikely,” Josh Kutin, head of asset allocation for Columbia Threadneedle, said in an interview at Bloomberg’s New York headquarters. “Will it be the full number that’s priced in right now? I think that’s unlikely as well. I think somewhere between is pretty fair.”

Elsewhere, oil futures fell as Saudi Arabia expressed hope that OPEC and its allies will agree to extend production cuts into the second half. Bitcoin jumped as much as 11%, heading toward its highest close in more than a year.

Here are some key events coming up:

• Federal Reserve, the Bank of Japan and the Bank of England all set monetary policy, along with central banks in Norway, Brazil, Taiwan and Indonesia.
• The Fed meeting begins Tuesday with a decision and press conference the next day. Officials are expected to debate a rate cut to shelter the U.S. economy, in part, from the fallout caused by escalating trade disputes.
• In the U.K. Tuesday there will be a second ballot on the leadership contest to choose Theresa May’s successor as leader of the country’s ruling party.
• Final May CPI data for the euro zone are due Tuesday.

These are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.1% as of 4:03 p.m. New York time, while the Nasdaq Composite Index gained 0.6% and the Dow Jones Industrial Average increased 0.1%.
• The Stoxx Europe 600 eased less than 0.1%.
• The MSCI Emerging Market Index dropped 0.4%.
• The MSCI Asia Pacific Index fell 0.4%, the fourth consecutive decline.

Currencies

• The Bloomberg Dollar Spot Index rose less than 0.1%.
• The euro rose less than 0.1% to $1.1218, while the yen was little changed at 108.57 per dollar.
• The British pound fell 0.4% to $1.2542.
• The MSCI Emerging Markets Currency Index fell 0.1%, the fourth consecutive decline.

Bonds

• The yield on 10-year Treasuries rose less than 1 basis point to 2.09%.
• Germany’s 10-year yield rose 1 basis point to negative 0.25%.

Commodities

• West Texas Intermediate fell 1.2% to $51.87 a barrel, the first drop in three trading sessions.
• Gold dropped 0.2% to $1,339 an ounce.
• The Bloomberg Commodity Index fell less than 0.1%, the first drop in third days.

©2019 Bloomberg L.P.