European stocks falter after Asia rally; oil rises, dollar advances

Bloomberg

European shares failed to carry forward a rally from Japan and the US, where the S&P 500 index notched its best week in five years. Oil climbed while the dollar advanced against most major peers.
The Stoxx Europe 600 index slipped as auto and consumer stocks dropped. That contrasted with Asia, where equities built on their best week since September 2016 as Japanese stocks closed higher after the yen fell. US equity futures dropped, German bunds retreated with most European bonds and the euro fluctuated.
European markets were the centre of investor attention on Monday as US stocks and Treasuries take a break for Presidents’ Day holiday and markets in Hong Kong and China remain closed for the Lunar New Year. The continent’s equity gauge has trailed its American counterpart since a global selloff earlier this month, partly thanks to a jump in the euro.
As the week rolls on the US Treasury will open the borrowing floodgates, and it’ll be up to bond traders to signal how much that extra supply will cost American taxpayers. The Treasury will pack in auctions totaling
$258 billion this week, including record-sized sales of three- and six-month bills. With little in the way of significant economic data on the schedule, the sales will provide the clearest gauge yet of how steeply borrowing costs may rise.
In Asia, currency traders saw the yen retreat from a 15-month high even as data showed Japan’s exports and imports grew strongly in January from a year earlier in a sign the economy continues to expand.
Bank of England Governor Mark Carney on Monday addresses the Parliament’s Treasury Committee on the Feb. 8 policy decision and forecasts. A slew of UK economic data is due this week including fourth-quarter GDP and employment figures. The Reserve Bank of Australia releases minutes of its February meeting on Tuesday. The US Treasury plans to sell $151 billion of debt in three auctions on Tuesday that will result in the heaviest day of T-bill supply on record, according to Bloomberg data going back to 1994. The Federal Reserve will release minutes on Wednesday of its Jan. 30-31 meeting, Janet Yellen’s last as chair, where officials kept the rate unchanged. Fed policy makers speaking this week include New York Fed President William Dudley and Atlanta Fed President Raphael Bostic. Cleveland Fed President Loretta Mester is among speakers at the US Monetary Policy Forum in New York City. Companies announcing earnings this week include: Walmart, Home Depot, HSBC, BHP Billiton, Glencore, Barclays.
The Stoxx Europe 600 Index declined 0.6 percent as of 3:25 pm London time. Futures on the S&P 500 Index fell 0.4 percent. The MSCI Asia Pacific Index climbed 0.9 percent. The MSCI Emerging Market Index jumped 0.2 percent.
The Bloomberg Dollar Spot Index climbed 0.2 percent. The euro fell 0.1 percent to $1.2388. The British pound fell 0.3 percent to $1.3983. The Japanese yen fell 0.3 percent to 106.57 per dollar. South Africa’s rand declined 0.7 percent to 11.675 per dollar. The MSCI Emerging Markets Currency Index gained 0.1 percent.
Germany’s 10-year yield advanced three basis points to 0.74 percent. Britain’s 10-year yield gained two basis points to 1.602 percent.