Stocks rise on growth outlook; Treasuries steady, dollar drops

Bloomberg

US and European stocks advanced on Monday, tracking peers in Asia as optimism over the world’s largest economy helped investors put protectionist fears to one side. Treasuries were steady, the dollar fell, and the pound and euro rose.
The Standard & Poor’s 500 and Nasdaq Composite Indexes opened higher after Microsoft Corp. agreed to buy coding site GitHub for $7.5 billion. The Stoxx Europe 600 Index climbed as almost every industry group traded in the green, while the MSCI Asia Pacific Index surged even as China warned it will withdraw from commitments it made on trade if President Donald Trump carries out a separate threat to impose tariffs on the Asian country. The dollar pulled back after completing a seventh week of gains. The 10-year Treasury yield held at about
2.9 percent.
“It’s nice to see that the market is finally ignoring every tweet or announcement on the trade front,” Matt Maley, an equity strategist at Miller Tabak & Co., wrote in an email to clients.
“The markets are finally beginning to realise that the announcements and tweets that are coming out of China, Canada, Mexico, Europe and President Trump are just part of the negotiating process in the ‘world of Trump’.”
Investors are in a broad risk-on mood after impressive US jobs data, which provided an upbeat end to a week that was otherwise dominated by the threat of another euro-area crisis.
Much of that concern seems to have dissipated after nationalist parties finally took power in Italy, ending months of deadlock, while the Socialist led-opposition in Spain ousted Prime Minister Mariano Rajoy with a no-confidence vote on Friday.
Attention may yet turn back to trade, however. G-7 leaders meet in Quebec later this week, with the European Union and Canada threatening retaliatory measures unless Trump reverses course on new steel and aluminum levies.
Elsewhere, emerging-market stocks jumped and their currencies rose. West Texas Intermediate crude was little changed amid speculation OPEC may phase out supply cuts at a time when American shale continues to surge.
Growth at US service industries probably improved in May for the first time in four months,
indicating the economy is strengthening after a first-quarter slowdown, economists forecast. Reserve Bank of India rate decision on Wednesday. US trade balance and Australia GDP also out on Wednesday. On Thursday, Japanese Prime Minister Shinzo Abe meets with US President Trump at the White House to discuss the planned US summit with North Korea’s Kim Jong-un. G-7 Leaders’ Summit starts in Quebec on Friday through to June 9.
The S&P 500 Index gained 0.3 percent, the Nasdaq Composite Index increased 0.3 percent and the Dow Jones Industrial Average rose 0.5 percent in New York. The UK’s FTSE 100 Index rose 0.6 percent to the highest in more than a week. The MSCI Emerging Market Index rose 1.3 percent. Japan’s Nikkei 225 Stock Average gained 1.4 percent to the highest in a week on the biggest rise in seven weeks.
The Bloomberg Dollar Spot Index fell 0.3 percent, after touching the lowest level in almost three weeks. The euro gained 0.5 percent to $1.1711, after touching the strongest level in almost two weeks. The British pound gained 0.1 percent to $1.3364. The Japanese yen was little changed at 109.54 per dollar.
The yield on 10-year Treasuries was little changed at 2.91 percent. Britain’s 10-year yield rose one basis point to 1.29 percent.