Stocks Flat, Metals Rise as Markets Await Earnings: Markets Wrap

Updated on
  • Iron ore climbs nearly 5%, zinc and copper also higher
  • Chinese growth, European inflation, ECB meeting in focus

Citigroup's Liu Says China's Economy Has Stabilized

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Stocks were little changed Monday as metals climbed on better-than-expected Chinese growth. The pound fell as Brexit negotiations resumed.

The S&P 500 Index stalled after reaching a record on Friday while the Nasdaq 100 was fractionally higher. The Stoxx Europe 600 Index swung between gains to losses after a report showed stagnating consumer prices in the euro area. Iron ore, zinc and copper benefited from figures showing China’s economy expanded faster than anticipated in the second quarter. The dollar steadied after a five-day losing streak. Treasury yields slipped.

With U.S. equity markets continuing to flirt with new highs, investor appetite for risk remains robust. Citigroup Inc.’s Global Risk Aversion Macro Index, which measures tolerance across a series of asset classes, is at a three-year low and in line with levels seen before the 2008 financial crisis.

The strong growth statistics for the world’s second biggest economy followed U.S. inflation data last week that undermined the case for tighter monetary policy and pushed stocks to record levels. European data was largely in line with expectations, leaving investors to weigh three days of gains against the uncertainty of a European Central Bank meeting this week and the ramping up of the earnings season.

Read our Markets Live blog here.

On the radar this week:

  • The ECB meets Thursday. Bloomberg Intelligence expects no change then, and no rate hike before 2019. Reuters cited unidentified officials as saying the bank is keen to keep asset purchases open-ended. 
  • The Bank of Japan is forecast to stand pat at its meeting Thursday.
  • Round two of Brexit talks get underway in Brussels.
  • Australia’s central bank on Tuesday releases minutes of its July 4 gathering. Government data on the labor market is due Thursday.

Here are the main moves in markets:

Stocks

  • The S&P 500 closed down a fraction at 2,459.16, after hitting an all-time high on Friday.
  • The Dow Jones Industrial Average slipped a few points to 21,631.92 following Friday’s record close. The Nasdaq 100 Index gained less than 0.1 percent.
  • Europe’s Stoxx 600 Index was essentially flat even as miners climbed 0.9 percent.

Currencies

  • The euro added 0.1 percent to $1.1482, and the pound lost 0.3 percent to $1.3056.
  • Bloomberg’s Dollar Spot Index rose less than 0.1 percent.

Bonds

  • The 10-year yield on U.S. Treasuries declined two basis points to 2.31 percent after dropping five basis points last week.
  • The yield on German 10-year bunds fell two basis points, while the yield on French benchmark bonds dropped one basis point.

Commodities

  • West Texas Intermediate crude fell 1.2 percent to $45.98 a barrel.
  • Gold rose 0.4 percent to $1,234.13 an ounce.
  • Iron ore added 4.8 percent, copper climbed 1.4 percent and zinc gained 1 percent.

Asia

  • Despite the GDP data the Shanghai Composite Index retreated 1.4 percent amid concerns over the implications of a weekend meeting where President Xi Jinping said the central bank would play a greater role in defending against risks.
  • The kiwi fell after the deputy governor of New Zealand’s central bank said a lower currency would help rebalance growth.
  • Japanese markets were closed for Marine Day. South Korea’s Kospi Index advanced to an all-time high.

— With assistance by Adam Haigh

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