Stocks gain with pound as dollar falls before Yellen’s testimony

BLOOMBERG

Investors took a positive cue from the latest polls on Britain’s referendum over European Union membership, with global stocks advancing and the pound rising to the highest level since before the vote date was set. The dollar weakened before Federal Reserve Chair Janet Yellen speaks on monetary policy.
Sterling strengthened for a third day even as separate opinion polls showed leads for both the “Remain” and “Leave” campaigns two days before the vote. The MSCI All-Country World Index headed for the highest close in almost two weeks while gold fell with the yen as haven demand eased. A gauge of the dollar declined for a fifth day in the longest run of losses since the start of April before Yellen’s testimony to lawmakers.
Global equities have rebounded from a one-month low on Thursday as bookmakers’ odds indicated a growing probability Britons will vote to stay in the EU. A YouGov/Times poll published late on Monday showed those favoring Brexit at 44 percent and 42 percent for “Remain,” while an ORB/Daily Telegraph survey had those wanting to stay in the EU at 53 percent and “Leave” at 46 percent.
“Sterling is supported by the recent rise in support for the ‘Remain’ camp, but if you look at an average of recent polls they still suggest it is neck and neck,” said Steven Barrow, head of Group-of-10 strategy at Standard Bank Group Ltd. in London.
“It’s hard for traders or investors to go into Thursday with any strong conviction — or large position.”

Stocks
The MSCI AC World Index rose 0.2 percent at 8:05 a.m. in New York, after climbing 2.3 percent in the previous two days. The Stoxx Europe 600 Index added 0.5 percent, with banks rising for a third day, while miners followed commodity prices lower.
Kion Group AG slid 4.9 percent after German maker of forklifts agreed to buy warehouse-equipment company Dematic for about $2.1 billion. Whitbread Plc advanced 2.5 percent after saying it maintained sales growth in the first quarter as Costa Coffee shops and Premier Inns budget hotels performed better than analysts estimated.
Futures on the S&P 500 climbed 0.5 percent, indicating U.S. equities will extend gains for a second day, after the index rose the most in almost four weeks on Monday.

Currencies
The pound strengthened 0.3 percent to $1.4740, after reaching $1.4783 and adding to a 3.5 percent jump in the previous two days.
Billionaire investor George Soros said sterling may slump more than 20 percent if British voters choose to leave the EU, a devaluation that would be bigger and more disruptive than when he profited by betting against the currency in 1992.
The Bloomberg Dollar Spot Index slipped 0.1 percent, falling to its lowest in more than a month. The gauge has weakened every day since the Fed left interest rates unchanged last week and Yellen said Brexit was a factor in the
decision.
The euro strengthened for a third day versus the greenback, its longest winning streak in seven weeks. European Central Bank President Mario Draghi will be speaking Tuesday in Brussels.
The yen weakened 0.6 percent, after surging 3 percent over the last seven trading sessions, as a technical indicator — the relative strength index — reached a level that indicated a reversal was likely.
Finance Minister Taro Aso signaled that Japan’s government won’t intervene to stem the yen’s strength without due consideration

Commodities
Gold for immediate delivery declined 0.8 percent, extending Monday’s retreat from its highest close since January 2015.
West Texas Intermediate crude dropped 1.1 percent to $48.84 a barrel in New York, after rallying 6.8 percent in the last two sessions. U.S. inventories probably fell by 1.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday.
Copper slid from a two-week high in London and nickel dropped 0.4 percent, after ending the last session at a six-week high.
U.S. natural gas futures fell as much as 1.4 percent after settling Monday at a nine-month amid forecasts for unusually hot weather across the country through next week. The deadly heat hitting the Southwest states is set to ease from Tuesday.

Bonds
European government bonds fell, pushing German 10-year yields up two basis points to 0.07 percent, after touching 0.075 percent, the highest since June 7.
U.S. 10-year treasuries advanced for the first time in four days, pushing their yield down by one basis points to 1.68 percent. The rate jumped eight basis points on Monday, the biggest increase in a month.
“The Treasury market remains at the mercy of event risk,” primarily the U.K. referendum Thursday, JPMorgan Chase & Co. analysts, including New York-based Jay Barry, wrote in a client note. In reaction to Yellen’s testimony, “we expect more muted yield moves, particularly given the market’s focus on global geopolitics,” according to the note.