Dollar strengthens as oil gains, stocks grind higher

Bloomberg

The dollar strengthened and Treasuries fell after Federal Reserve Chair Janet Yellen suggested gradual rate increases are warranted despite soft inflation. Gains in oil and copper drove a gauge of commodities to a six-month high.
The S&P 500 Index rose less than 0.1 percent to a record, led by technology and media shares. Apple Inc., JPMorgan Chase & Co. and Comcast Corp. were among the biggest contributors to the advance. The Stoxx Europe 600 edged higher. Spain’s IBEX 35 Index declined and the euro weakened as the stand-off over independence for Catalonia continued. The pound broke a five-day winning streak on speculation that Brexit talks between the UK and the European Union could be headed for a breakdown.
“The markets continue their winning ways,” Paul Nolte, a portfolio manager at Kingsview Asset Management in Chicago, wrote in a note. “Bullishness is building and economic growth seems to be picking up.” WTI crude topped $52 a barrel on concern tensions between Iraqi forces and Kurds will disrupt supplies, while copper surged to the highest since January 2014 and palladium traded above $1,000 an ounce for the first time since 2001.
Yellen said her “best guess” is consumer prices will soon accelerate after a period of surprising softness, a forecast echoed by ECB President Mario Draghi and BOE Governor Mark Carney.
In Spain, investors are awaiting the next move in a crisis that has weighed on Spanish assets and may also roil the euro. Catalan President Carles Puigdemont defended his region’s claim to independence as the Spanish government signalled it will move ahead with the process of suspending self-rule this week.
Elsewhere, Mexico’s peso fell to a five-month low after President Donald Trump’s administration made aggressive demands during a fourth round of negotiations on the future of the North American Free Trade Agreement.
Among Fed speakers lined up this week are Philadelphia Fed President Pat Harker on Tuesday, and New York Fed President Bill Dudley and Dallas Fed President Robert Kaplan on Wednesday. The Fed’s Beige Book will also be published on Wednesday. Beginning construction on new homes and sales of previously owned properties will show the negative effects of Hurricanes Harvey and Irma on demand and building. China releases data for GDP, industrial production and retail sales on Thursday. Earnings season gets into full swing with major US financial firms including Morgan Stanley, Goldman Sachs Group Inc. and Blackstone Group LP. posting results. BOE Governor Mark Carney appears before the UK Parliament’s Treasury Committee for the first time since June’s election on Tuesday.
The S&P 500 Index rose 0.1 percent as of 10:48 am New York time. The Stoxx Europe 600 Index was little changed at the highest since June. Spain’s IBEX Index decreased 0.7 percent. The euro decreased 0.2 percent to $1.1799. The British pound slipped less than 0.1 percent to $1.3282, the first retreat in a week. The Japanese gained 0.1 percent to 111.76 per dollar. Japan’s Topix index advanced 0.6 percent, as did Australia’s S&P/ASX 200 Index. South Korea’s Kospi index added 0.3 percent. Hong Kong’s Hang Seng Index was 0.8 percent higher, while the Shanghai Composite Index slipped 0.4 percent.