BNN Bloomberg's mid-morning market update: Jan. 16, 2019
Stocks gained as signs of a better-than-expected start to the earnings season countered concerns about rising U.S.-China tensions. The dollar rose, while Treasuries declined.
The S&P 500 advanced for a second day to within a whisker of its average price over the past 50 days, a level it hasn’t breached since early December. Financials buoyed major indexes as Goldman Sachs and Bank of America surged following quarterly reports. The tech-heavy Nasdaq 100 erased gains late in the trading session after a report said U.S. prosecutors are investigating Huawei Technologies for allegedly stealing trade secrets.
The 10-year Treasury yield rose to around 2.72 per cent, while the dollar gained against almost all major currencies.
In Europe, Deutsche Bank gained after regulators were said to favor a merger with a European lender. The pound rose versus most peers after Prime Minister Theresa May’s government won a no-confidence vote. West Texas crude rose above US$52 a barrel.
“I think what you’re seeing with the financials and banks in particular is part of just a wider risk-on rally,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. “I think the financials are benefiting from both being relatively undervalued as well as just getting that cyclical tailwind.”
The mood in equity markets remains fairly buoyant after China pledged to step up efforts to support growth and European Central Bank President Mario Draghi said the euro area will avoid a recession even though recent data signaled softening momentum. Bank of America’s Chief Financial Officer Paul Donofrio further reassured investors, saying on an earnings call that he’d seen nothing to suggest an economic slowdown is imminent.
Still, there are plenty of worries to give investors pause before taking this month’s rally further. The political impasse in Washington continues to leave swathes of the federal U.S. government shuttered, and the U.K.’s Brexit drama threatens to impair business confidence in the second-largest European economy.
Here are some important events coming up:
A confidence motion vote will take place after 7 p.m. in London as the opposition Labour Party tries to force a general election. Alcoa, Indian IT company Mindtree, Netflix, Taiwan Semiconductor are posting results.
These are the main moves in markets:
The S&P 500 Index climbed 0.2 per cent as of 4 p.m. New York time after rising as much as 0.6 per cent. The Stoxx Europe 600 Index increased 0.5 per cent, the highest in five weeks. The U.K.’s FTSE 100 Index sank 0.5 per cent. The MSCI Emerging Market Index rose 0.5 per cent.
The Bloomberg Dollar Spot Index climbed 0.1 per cent to the highest in more than a week. The euro dipped 0.1 per cent to US$1.1402. The British pound was little changed at to US$1.2863. The Japanese yen fell 0.2 per cent to 108.89 per dollar.
The yield on 10-year Treasuries climbed one basis point to 2.72 per cent. Germany’s 10-year yield advanced two basis points to 0.22 per cent. Britain’s 10-year yield gained seven basis points to 1.326 per cent, the highest in almost seven weeks.
West Texas Intermediate crude rose 0.5 per cent to US$52.38 a barrel. Gold gained 0.4 per cent to US$1,293.40 an ounce.