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Bloomberg
The global rally in risk assets that sent US stocks to a 12-week high sputtered on Tuesday, with the S&P 500 struggling to push higher. Treasuries rose while Italian bonds fell.
Contracts for the S&P 500 had signalled the underlying gauge would extend gains following its highest finish since mid-March, but momentum faded as the open neared.
After a shaky start the Stoxx Europe 600 Index advanced for a third day with technology companies and automakers leading the way. Italian bonds were poised for the first retreat since they blew up a week ago as Prime Minister Giuseppe Conte pledged in his maiden speech to pursue a programme of fiscal expansion.
Sterling was the stand out among major currencies, rising after the UK services sector — the largest part of the economy — grew more than forecast in May. The dollar climbed while the euro dropped. West Texas oil reversed a gain to head back toward $64 a barrel on a report that the US government asked some OPEC members to increase production.
The outlook for global equities has taken an upward turn in recent sessions, not least because stronger-than-expected data from the US showed the world’s largest economy is in rude health. It’s a relief to investors after weeks of turmoil, though with President Donald Trump stepping up his aggressive trade policies and populists poised to start governing in Italy, there remain plenty of reasons for caution.
Elsewhere, the South African rand weakened, yields on benchmark bonds rose and retail and banking stocks fell as a report showed that the country’s economy shrank the most in nine years in the first quarter. The lira and peso also dropped.
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. Also on Thursday, euro-zone GDP. G-7 Leaders’ Summit starts in Quebec Friday through to June 9.
The S&P 500 Index and the Dow Jones Industrial Average were little changed, while the Nasdaq Composite Index was 0.2 percent higher in New York. The UK’s FTSE 100 Index fell
0.6 percent. The MSCI Emerging Market Index was little changed. Japan’s Nikkei 225 Stock Average gained 0.3 percent to the highest in more than a week.
The Bloomberg Dollar Spot Index rose 0.2 percent, rebounding from the lowest level in almost three weeks. The euro eased 0.3 percent to $1.1669. The British pound gained 0.4 percent to $1.3372. The Japanese yen strengthened 0.1 percent to 109.71 per dollar.
The yield on 10-year Treasuries fell three basis points to 2.91 percent. Britain’s 10-year yield dropped one basis point to 1.29 percent. West Texas Intermediate crude fell 0.4 percent to $64.51 a barrel, a fourth straight decline. Gold rose 0.1 percent to $1,293.09 an ounce.