Stocks extend gains as dollar steadies, oil falls

A global stock rally sparked by Federal Reserve Chairman Jerome Powell’s dovish comments continued into Wednesday, though the pace of gains slowed amid lingering trade-war concerns. Treasuries edged higher, while the dollar steadied after four days of decline.

Technology shares led the advance in the Stoxx Europe 600 as software companies including SAP and Micro Focus jumped after a positive sales forecast by US peer Salesforce. Futures on the S&P 500 indicated a higher US open after the underlying index climbed the most since January on Tuesday as Powell said the central bank is monitoring the trade war’s impact and would act appropriately to sustain the US expansion. Japan led the charge in Asia, with the Topix index up 2.1%, though gains elsewhere in the region were more modest. European government bonds were mixed, while the euro strengthened.

The shot in the arm for equities from Powell punctuates a week with similar comments from his colleagues that the Fed is willing to take action, though not yet. Bond markets, which have been signalling the risk of a significant global slowdown, are already pricing multiple rate cuts by the Fed this year. If the US-China trade dispute persists, it will lead to slower growth and more uncertainty, Blackstone President Jonathan Gray said.

"The market is sending out invitations for a rate cut party, and waiting for the Fed to turn-up," said Greg Gibbs, director and founder of Amplifying Global. Powell "gave just enough hint that he might turn up, but he is still reluctant to acknowledge that risks to growth have increased."

Elsewhere, oil declined and the Mexican peso dipped after President Donald Trump tweeted that the US wasn't bluffing on its tariff proposal that's due to kick in next week. Earlier, Mexico’s president said he hoped to reach a deal before the deadline. The pound headed for a two-week high as British Prime Minister Theresa May prepares to step down on Friday. Yields on Japanese 10-year bonds retreated to almost a three-year low.

Here are some notable events coming up:

China President Xi Jinping begins a two-day visit to Russia on Wednesday. Theresa May steps down on Friday as leader of the Conservative Party. Friday’s US jobs report is projected to show payrolls rose by 180 000 in May, unemployment held at 3.6%, a 49-year low, and average hourly earnings growth sustained a 3.2% pace.

These are some of the main moves in markets:

Stocks

The Stoxx Europe 600 Index rose 0.3% as of 09:42 London time, the highest in more than a week. Futures on the S&P 500 Index climbed 0.3%, the highest in more than a week. The MSCI All-Country World Index increased 0.3%. The UK’s FTSE 100 Index gained 0.2%.

Currencies

The Bloomberg Dollar Spot Index rose 0.1%, the first advance in a week. The euro increased 0.2% to $1.1275, the strongest in seven weeks. The British pound climbed 0.2% to $1.2719, the strongest in more than two weeks. The Japanese yen fell 0.1% to 108.28 per dollar, the biggest fall in a week.                                                                                        
Bonds

The yield on 10-year Treasuries decreased less than one basis point to 2.13%. Germany’s 10-year yield gained less than one basis point to -0.20%. Britain’s 10-year yield decreased one basis point to 0.891%. Japan’s 10-year yield declined two basis points to -0.123%, the lowest in almost three years on the largest decrease in almost 10 weeks.                                 
Commodities

West Texas Intermediate crude decreased 1% to $52.94 a barrel, the lowest in more than 20 weeks. Gold rose 0.6% to $1,332.87 an ounce, reaching the highest in 15 weeks on its sixth consecutive advance. The Bloomberg Commodity Index declined 0.4%, the lowest in five months.

ZAR/USD
16.76
(-0.05)
ZAR/GBP
21.18
(-0.23)
ZAR/EUR
18.94
(-0.09)
ZAR/AUD
11.65
(-0.04)
ZAR/JPY
0.16
(+0.04)
Gold
1798.11
(+0.03)
Silver
18.69
(+0.17)
Platinum
824.50
(+0.30)
Brent Crude
43.14
(+2.10)
Palladium
1961.36
(+0.61)
All Share
55417.89
(-0.66)
Top 40
51154.08
(-0.74)
Financial 15
10472.31
(+1.28)
Industrial 25
76134.69
(-1.67)
Resource 10
52483.78
(-0.20)
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