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Bloomberg
US stocks slipped with Treasuries, while gold advanced as caution rippled through markets after Federal Reserve Chair Janet Yellen all but assured investors that interest rates will rise next week. The S&P 500 Index slipped, with JPMorgan Chase & Co. warning that hawkish Fed rhetoric has increased the likelihood for a short-term pullback. The dollar and Treasuries were both little changed. Deutsche Bank AG pulled down European shares after announcing plans to raise capital. Metals slumped on Chinese growth prospects
and the French presidential race continued to roil the euro. Gold futures rose
0.3 percent.
Markets appear to be coming off recent peaks as investors price in a near-certain March US interest rate increase by the Federal Reserve. Chinese Premier Li Keqiang warned of larger challenges ahead during his work report to the annual
National People’s Congress gathering in Beijing. In Europe, politics has become the main market driver as election campaigns in the Netherlands, France and Germany put the status quo under threat.
“The ‘pothole’ is a political one with far-right parties gaining ground in opinion polls ahead of both a Dutch and French ballots in spring,†Luca Paolini, chief strategist at Geneva-based Pictet, said in a research note. “We are scaling back exposure to European stocks, albeit retaining our overweight stance.â€
What’s ahead for the markets:
Mario Draghi probably won’t flinch at Thursday’s ECB meeting even after headline inflation reached its 2 percent target in February. He’s expected to keep QE going until the end of the year with underlying price pressures muted. Other economic highlights of the week are industrial output for Germany, France and the U.K., and German factory orders. U.S. jobs data for February are on tap for Friday. Employers probably added around 190,000 workers to payrolls, in line with the average over the past six months and a sign of steady job growth, economists forecast. European automakers gather this week at the Geneva Motor Show. Philip Hammond’s U.K. budget arrives Wednesday. The chancellor pledged on Sunday to set aside money to cushion the economy from Brexit, and said there won’t be any borrowing to fund spending commitments as he seeks to balance the books in the next Parliament.
Here are the main moves in markets:
Stocks
The S&P 500 declined 0.4 percent to 2,373.75 at 10:11 a.m. in New York. The benchmark index gained less than 0.1 percent on Friday to end higher for a sixth straight week. The Stoxx Europe 600 lost 0.5 percent, with Deutsche Bank dropping 5.5 percent. The Topix fell 0.2 percent as Japan moved to the highest possible alert level after North Korea fired four ballistic missiles into nearby waters. Most other Asian equity markets rose, with the Kospi erasing a loss as Samsung Electronics Co. jumped 1.2 percent.
Currencies
The euro weakened 0.2 percent to $1.0605, the worst performer among major currencies after Norway’s krone. The Bloomberg Dollar Spot Index added 0.1 percent, headed for its sixth advance in seven days.
Bonds
The yield on the benchmark 10-year Treasury note rose one basis point to 2.49 percent. German bonds were Europe’s best performers, as 10-year yields dropped one basis point to 0.34 percent on haven demand.
Commodities
West Texas Intermediate crude edged higher 0.2 percent to $53.49 a barrel as an increase in U.S. drilling countered a halt in some Libyan crude exports after clashes. Copper and aluminum fell by at least 1.1 percent on speculation demand from China will slow.