Stocks rise, bonds slip on shutdown, trade hopes

Bloomberg

Stocks across Europe and Asia advanced and US futures rose after news emerged of a tentative deal among American lawmakers to avert another government shutdown. Treasury yields climbed.
Carmakers led the advance in the Stoxx Europe 600 Index, while contracts on the Dow, Nasdaq and S&P 500 all pointed to a firmer open. The dollar held on to most of its recent gains after US lawmakers said they reached an “ agreement in principle” on border security funding that would avert a second government shutdown. The Trump administration said the president still wants to meet China’s Xi Jinping in an effort to end the trade war.
In Japan, the country’s 10-year bond yields remained in negative territory even after the central bank cut purchases of some longer-dated bonds for the first time since July in a regular operation. The institution has sought to taper its purchases while focusing on yield targets rather than quantitative easing. Nissan reported worse-than-expected results.
The prospect of a deal to keep the US government open together with hints that President Donald Trump may reach an accord with China appear to be rekindling the rally in riskier assets after a turbo-charged start to the year showed signs of ebbing last week. A dovish shift by the world’s central banks has also helped, but at the same time has underscored the dilemma facing investors — join the chase for late-cycle gains, or gird themselves for a looming slowdown in growth.
“The trade talks are key,” Jason Vaillancourt, Putnam Investments global asset allocation co-head, said on Bloomberg TV. “If we can get a little bit of those growth engines starting to level out around the world, whether it be Japan or Europe, and just bottom out, then I think that will go a long ways to putting a base under risky assets.”
Elsewhere, Brent crude rose after its lowest close in more than a week. Emerging markets shares climbed and their currencies edged higher. The pound held steady as UK Prime Minister Theresa May prepared to update lawmakers on the progress — or lack thereof — of Brexit talks with the EU. The offshore yuan strengthened for the first time in five days.

Stocks
Futures on the S&P 500 Index increased 0.6 percent as of 10:46 a.m. London time, the largest climb in more than a week. The Stoxx Europe 600 Index gained 0.6 percent. The MSCI All-Country World Index advanced 0.3 percent, the largest gain in a week. The MSCI Emerging Market Index increased 0.3 percent, the first advance in a week.

Currencies
The Bloomberg Dollar Spot Index decreased less than 0.05 percent, the first retreat in almost two weeks. The euro gained 0.1 percent to $1.1282, the first advance in more than a week. The Japanese yen fell 0.1 percent to 110.48 per dollar, the weakest in almost seven weeks. The British pound dipped less than 0.05 percent to $1.2851, the weakest in more than a month. The MSCI Emerging Markets Currency Index jumped 0.1 percent, the largest climb in more than a week.

Bonds
The yield on 10-year Treasuries gained three basis points to 2.68 percent, the biggest climb in more than a week. Germany’s 10-year yield climbed one basis point to 0.13 percent. Britain’s 10-year yield increased one basis point to 1.186 percent. The spread of Italy’s 10-year bonds over Germany’s fell six basis points to 2.7236 percentage points.

Commodities
The Bloomberg Commodity Index jumped 0.3 percent, the biggest increase in more than a week. Brent crude advanced 1 percent to $62.14 a barrel. LME copper declined 0.8 percent to $6,103.50 per metric ton, the lowest in two weeks. Gold jumped 0.4 percent to $1,313.42 an ounce, the largest climb in almost two weeks.