© Reuters. Euro Gains, Dollar Steadies as Politics Dominates: Markets Wrap
(Bloomberg) — The advanced on optimism Germany’s Angela Merkel has made a breakthrough toward her fourth term after months of stalement, while the dollar recovered from earlier lows as the federal government shutdown continued. Asian equities were set for small gains when trading starts Monday.
Germany’s Social Democrats backed formal coalition talks with Chancellor Merkel, boosting the euro. The greenback edged higher with the House and Senate back in session Sunday amid a spending-bill impasse in Congress. Foreign exchange traders are also watching China’s appetite for currency strength as the yuan rallies beyond the symbolically key level of 6.4 per dollar for the first time since December 2015. Futures on equity gauges in Japan, Australia and Hong Kong pointed to a higher open.
Equity markets have largely shrugged off America’s government shutdown drama as bets on broadening global economic growth and the profit expansion pushed stocks to all-time highs this month. Commentary from policy makers after central bank decisions in Europe and Japan this week may provide the next impetus for a surge in government bond yields that’s been prompted by signals that unprecedented stimulus will soon be wound back.
Terminal users can read more in our markets blog.
Here’s what to watch out for this week:
- Barring any last minute dramatics in Washington, President Donald Trump will join world leaders and senior executives in Davos, Switzerland, for the annual World Economic Forum.
- Central banks: Bank of Japan monetary policy decision and briefing on Jan. 23; European Central Bank rate decision on Jan. 25.
- U.K. Prime Minister Theresa May’s Brexit bill is set to be taken up in the House of Lords.
- Earnings season is in full swing: Netflix (NASDAQ:), UBS Group, Halliburton (NYSE:), Novartis, General Electric (NYSE:), Intel (NASDAQ:), LVMH Moet Hennessy Louis Vuitton, Starbucks (NASDAQ:), Hyundai Motor and Fanuc Corp. are among companies posting results.
- OPEC and partners, including Russia, will meet in Oman to review their strategy.
And these are the main moves in markets:
- The rose 0.4 percent to $1.2270 as of 6:30 a.m. in Tokyo.
- The rose 0.1 percent to 110.65 per dollar.
- Futures on Japan’s Stock Average closed about 0.2 percent higher late Friday in Chicago than the level when cash markets shut in Tokyo that afternoon.
- Futures on Australia’s advanced 0.5 percent.
- Futures on Hong Kong’s added 0.2 percent.
- The rose 0.4 percent to a record Friday.
- The MSCI All Country World Index gained 0.5 percent to an all-time high. Its up more than 5 percent this year.
- The yield on 10-year Treasuries rose three basis points to 2.66 percent on Friday, the highest since June 2014.
- sank 0.9 percent to $63.37 a barrel.
- rose 0.4 percent to $1,331.84 an ounce.
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