US stocks, dollar advance as Spain woes hit euro

Bloomberg

US stocks gained with the dollar, while Treasuries fell as investors assessed the prospect for tax cuts. The euro weakened in the wake of political turmoil in Spain.
The S&P 500 Index hovered near a record high to start the fourth quarter, with investors also watching developments in Las Vegas, where at least 50 people have died in the deadliest shooting in modern US history. The dollar headed for the strongest level since mid-August and 10-year Treasury yields slipped.
Spanish stocks slumped and the common currency was one of the worst performers among major peers after a violence-marred vote in Catalonia spurred the regional government to press towards a unilateral declaration of independence. Oil fell toward $50 a barrel.
“The critical thing for markets is the Catalan separatists have turned what was initially a very small likelihood risk of Spain’s wealthiest region decoupling, into a relatively high probability event,” Mint Partners credit analyst Bill Blain wrote in a note to clients.
The tensions also had a clear impact in the bond market, with Spanish premiums rising as yields on comparable German debt declined. Elsewhere gold dropped and West Texas oil fell below $51 a barrel after Baker Hughes data showed the US rig count climbing to 750 last week. The pound weakened against the dollar for the sixth time in seven days amid concerns about the stability of UK Prime Minister Theresa May’s government and after data showed slowing manufacturing growth.
Following a two-day pause the greenback is adding to gains from last week, when it benefited from speculation President Donald Trump could opt for a Fed boss who might pursue more aggressive policy tightening, not to
mention details of the administration’s tax plans.
Meanwhile, Australia’s equity benchmark had its biggest daily gain in almost two months after China, its top trading partner, reported an unexpectedly strong manufacturing gauge and announced plans to cut the amount of cash banks must hold as reserves for certain loans.
Holidays in markets including Hong Kong, China, India and South Korea affected the region on Monday. Manufacturing PMIs for September are due for most of the world’s major economies. The US ISM measure comes on Monday. Investors will monitor progress toward forming coalition governments in Germany and New Zealand after elections last month left no party in either country with a majority. Japanese political polls ahead of elections expected later this month.
The S&P Index climbed 0.06 percent as of 9.32 am New York time The Stoxx Europe 600 Index increased 0.2 percent , hitting the highest in 14 weeks with its eighth consecutive advance.
The UK’s FTSE 100 Index climbed 0.6 percent to the highest in a month. Germany’s DAX Index jumped 0.2 percent, reaching the highest in 15 weeks on its sixth consecutive advance. The MSCI Emerging Market Index gained less than 0.05 percent to the highest in a week.