Dollar gains, stocks rebound in short week for US exchanges

Bloomberg

The dollar gained and US stocks rose after two down weeks as Congress takes a holiday break from tax talks and the closely watched Alabama senate election nears.
The Standard & Poor’s 500 Index opened slightly higher at the start of a truncated Thanksgiving week as investors gauge whether there are sufficient drivers to continue the march to historic highs. Strong earnings and solid global growth are balanced against lofty valuations in some markets, as well as the negative signal from the US yield curve.
“There is little US data flow and the discussions around the tax plan will probably shift to the back burner, as the Senate winds down for the holiday,” Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank, wrote in a note.
European investors are watching political news as the week begins. A month of exploratory coalition talks in Germany ended in a dramatic collapse on a dispute over migration policy. The upshot is that Europe’s dominant country remains hamstrung on the global stage, potentially affecting everything from policy toward the EU, Turkey and Russia to government spending.
Nevertheless, the Stoxx Europe 600 Index advanced and Germany’s DAX rebounded from a seven-week low, with investors judging the failure of coalition talks won’t threaten the region’s economy. Sterling strengthened after reports the UK may make concessions to smooth Brexit negotiations. “The immediate impact on the euro is likely to be limited,” said Lee Hardman, a currency analyst at MUFG in London.
West Texas intermediate crude retreated after surging the most in two weeks in the previous trading session, though it’s mostly held above $56 a barrel. Gold declined and Treasuries edged lower. Pound and gilts traders will focus on a potential downgrade to the UK growth outlook this week and the government’s efforts towards agreeing a Brexit divorce bill. Sterling was boosted on Monday by reports that the UK was preparing to make an enhanced divorce bill offer to the EU ahead of crucial talks.
Volumes may be lower than average this week due to the Thanksgiving holiday in the US. The minutes from the Fed’s latest policy meeting are out on Wednesday. Market participants will gauge Fed officials’ eagerness to boost the benchmark interest rate in December, which is widely expected by the market. The UK will announce its budget on Wednesday; that could see a significant economic downgrade amid a continued impasse in its negotiations with the EU on Brexit.
The S&P 500 Index increased less than 0.05 percent at 9:34 am New York time. The Stoxx Europe 600 Index jumped 0.4 percent to 385.45. The UK’s FTSE 100 Index increased 0.1 percent. Germany’s DAX Index jumped 0.3 percent.
The yield on 10-year Treasuries rose one basis point to 2.36 percent. Germany’s 10-year yield was unchanged at 0.36 percent, the lowest in more than a week.