Dollar Retreats With U.S. Stocks as Gold Gains: Markets Wrap

(Bloomberg) -- The dollar dropped the most in two weeks while oil retreated from its highest close in 17 months as investors prepared to close out a volatile year for financial markets. U.S. stocks slipped to a three-week low in light holiday volume.

The Bloomberg Dollar Spot Index declined for the first time in four days after reaching the highest level in a decade. The S&P 500 Index ended little changed after briefly erasing losses after the U.S. announced sanctions against Russia over election hacks. Trading was almost 40 percent below the 30-day average. The strengthening yen sent Japan’s Topix to its biggest drop in more than a month, while European shares extended losses for 2016. Crude in New York slipped for the first time in nine days, halting the longest rally since 2010. Gold extended its winning streak to the longest since Sept. 22.

Trading has been thin across the globe during the last week of the year, with volumes in crude oil, equities and currencies all below average. Investors may be reallocating money as they assess post-election asset moves that took the dollar to multiyear highs, sent Treasuries tumbling and drove U.S. equities to records. The Obama administration Thursday imposed sanctions against Russian officials and state institutions in retaliation for hacking Democratic Party e-mails.

Stocks

• The S&P 500 fell less than one point to 2,249.35 at 4 p.m. in New York, the lowest level since Dec. 8. The Dow Jones Industrial Average slipped to 19,819, maintaining a 14 percent advance in the year. The Russell 2000 Index of small caps has surged 20 percent in 2016, most among major U.S. benchmarks.
• Data Thursday showed jobless claims declined last week from a six-month high in the prior period. The world’s largest economy
• The Stoxx Europe 600 Index lost 0.4 percent, after closing at the highest level in a year on Wednesday. The gauge is down 1.5 percent for 2016. 
• Japan’s Topix slid 1.2 percent. The benchmark is heading toward a loss of 1.2 percent for the year, its first annual decline in five years.

Currencies

• The Bloomberg Dollar Spot Index slipped 0.5 percent after trading Wednesday at the highest level in more than a decade. The slide erased a weekly gain and left the measure higher by 3.3 percent in 2016.
• The euro strengthened 0.7 percent to $1.0485, while the yen rose 0.5 percent to 116.63 per dollar.
• China’s offshore yuan inched lower toward 7 per dollar, widening its discount to the onshore rate to the most in more than two weeks, as traders sold the currency on bets it would face stronger depreciation pressures as the year turns.

Commodities

• Crude futures in New York slid 0.5 percent to settle at $53.77 a barrel after a government report showed U.S. crude stockpiles increased for a second week. Crude settled at $54.06 on Wednesday, the highest close since July 2015.
• Gold rose for a fourth session, adding 1.4 percent to $1,157.20 an ounce in New York. The metal has been rebounding from an 11-month low.
• Copper fell for a second day as investors book profits amid the strongest quarter for the metal in six years. Futures lost 0.5 percent to settle at $2.488 a pound in New York.

Bonds

• The yield on 10-year Treasury notes dropped three basis points to 2.48 percent, the lowest since Dec. 13.
• U.K. gilts led European bonds higher. Yields fell six basis points to 1.24 percent.
• The yield on German 10-year bunds fell two basis points to 0.18 percent.
• Australia’s 10-year yield slid seven basis points to 2.78 percent.

--With assistance from Anooja Debnath Namitha Jagadeesh Toshiro Hasegawa and Kelly Gilblom To contact the reporter on this story: Jeremy Herron in New York at jherron8@bloomberg.net. To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Tim Barwell, Will Davies