US stocks fluctuate, dollar retreats before Trump policy speech

Bloomberg

US stocks fluctuated near all-time highs, while the dollar and Treasuries retreated as investors awaited clues on President Donald Trump’s spending priorities. Politics set the tone in Europe, with the pound retreating and French bonds gaining.
The Dow Jones Industrial Average looked to add to its longest rally since 1992, while 10-year Treasury yields climbed for the first time in four days. Bloomberg’s Dollar Spot Index fell 0.1 percent as investors await Trump’s first budget and speech to Congress Tuesday. Sterling weakened after The Times reported Prime Minister Theresa May’s team is preparing for Scotland to call for a referendum on independence. French bonds gained following favorable opinion polls for independent presidential candidate Emmanuel Macron.
With elections taking place this year in France, the Netherlands and Germany against a backdrop of rising populism, and uncertainties around Trump’s policies and Brexit, investors have been hanging on every word from politicians and central bank officials. The next focus is set to be the US president’s speech, which will be parsed for details on spending and tax plans.
“We are concerned that the markets could be heading for a harsh reality check if the Trump administration fails to meet high expectations as reflected in strong equity gains, including risky assets,” Piotr Matys, currency strategist at Rabobank in London, wrote in a note to clients. “It seems to us that the markets are too optimistic, looking from the glass half full perspective and not pricing enough of the negatives.”

What’s ahead for this week:
In Trump’s address before a joint session of Congress, the president is expected to lay out his plans for tax and health-care reform and infrastructure spending. Investors will also be watching comments from Fed officials, including Yellen, who speaks at an event in Chicago at the end of the week. The UK government is setting aside time for a Parliamentary battle to overturn changes May fears could be made to her draft Brexit law when it’s debated in the House of Lords this week.
This week’s economic data include US personal income and spending. India and Australia will report on fourth-quarter GDP. China’s PMI data are expected to show continued expansion. Japan reports on factory output, housing starts and capital spending.
Here are the main moves
in markets:

Stocks
The S&P 500 Index fell 0.1 percent to 2,366.18 at 10:01 a.m in New York, after capping a fifth weekly gain. The Dow lost 5.27 points, headed for its first decline in 12 days. Seven of 11 main S&P 500 industries declined, with utilities and consumer-staple shares leading declines. Energy producers advanced. The Stoxx Europe 600 Index lost 0.4 percent, extending Friday’s declines. Deutsche Boerse AG dropped 4.6 percent and London Stock Exchange Group Plc fell 2.5 percent after LSE said the two companies’ merger plan is unlikely to proceed for regulatory reasons. Intesa Sanpaolo SpA jumped 4.5 percent after abandoning the idea of a merger with Assicurazioni Generali SpA. The Italian insurer slid 3.6
percent.

Currencies
The pound lost 0.3 percent to $1.2424 as of 9:31 a.m in New York. The euro gained 0.2 percent to $1.0586, aided by a report showing economic confidence in the region at the highest level since 2011. The Bloomberg Dollar Spot Index was little changed. The gauge fell 0.4 percent last week, its first drop in three weeks.

Bonds
French 10-year bond yields dropped one basis point to 0.92 percent and peripheral debt also got a boost from improved risk appetite. German benchmarks added one basis point to 0.2 percent. Yields on 10-year Treasuries rose two basis points to 2.33 percent, reversing three straight days of declines.