Students look at an electronic stock board at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan,(Photographer: Tomohiro Ohsumi/Bloomberg)

Stocks Drift Lower as Oil Gains, Treasuries Fall: Markets Wrap

(Bloomberg) -- U.S. stocks edged lower as oil drillers rallied with crude while industrial shares lagged behind. Treasuries fell as the Federal Reserve started its two-day policy meeting.

U.S. benchmarks were mixed, with automobile and utility shares weighing on the S&P 500 Index, while a gain for Amazon.com Inc. helped lift the Nasdaq. President Donald Trump told the United Nations that the trade deficit with China “is just not acceptable,” stoking fears of greater trade tensions. Brent oil climbed to a four-year high.

Benchmark Treasury yields touched 3.1 percent and the dollar weakened slightly. Core European bonds slipped, but Italian notes rallied as the country crept closer to a budget. The Stoxx Europe 600 Index posted its seventh gain in eight days, and Japanese equities rose to the highest since January.

Stocks Drift Lower as Oil Gains, Treasuries Fall: Markets Wrap

Riskier assets are drifting in the face of mounting political, trade and policy headwinds and investors look toward what could be a long and bruising conflict between the U.S. and China following the Asian nation’s decision to call off planned talks after the latest round of tariffs. Adding to political concerns are reports that U.S. Deputy Attorney General Rod Rosenstein, who oversees a probe into Russian interference in the American election, may be poised to leave his post, while the nomination of Brett Kavanaugh to the U.S. Supreme Court continues to be mired in controversy.

Investors are also looking forward to the Federal Reserve. The central bank’s policy meeting this week will likely see interest rates increased for the third time in 2018 and feature fresh projections for the next few years.

“What will be more interesting will be to find out” the number of rate hikes anticipated for next year, Iain Stealey, portfolio manager at JPMorgan Global Strategic Bond Fund, who expects two Fed rate hikes this year and two in the first half of 2019, said on Bloomberg TV. “Inflation is above target, so they can keep going on this sort of slow normalization.”

Elsewhere, Brent climbed above $81 a barrel, reaching the highest since November 2014, while most metals fell. The pound added to gains made Monday when the currency was buoyed by increasing talk of a second U.K. referendum on the final Brexit deal.

Terminal users can read our Markets Live blog.

Here are some key events coming up this week:

  • Japanese Prime Minister Shinzo Abe meets with President Donald Trump in New York to discuss trade.
  • The Fed decision on Wednesday will be followed by a press conference with Chairman Jerome Powell.
  • Thursday sees durable goods, GDP data and jobless claims for the U.S.

These are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.1 percent as of the close of trading in New York; the Dow Jones Industrial Average sank 0.3 percent; the Nasdaq Composite rose 0.2 percent.
  • The Stoxx Europe 600 Index gained 0.5 percent.
  • The U.K.’s FTSE 100 Index increased 0.7 percent to the highest in more than three weeks.
  • The MSCI Emerging Markets Index was little changed.
  • The Nikkei 225 increased 0.3 percent.

Currencies

  • The Bloomberg Dollar Spot Index decreased less than 0.1 percent.
  • The euro increased 0.2 percent to $1.1768.
  • The British pound gained 0.5 percent to $1.3185.
  • The Japanese yen fell 0.1 percent to 112.94 per dollar.

Bonds

  • The yield on 10-year Treasuries were little changed at 3.09 percent after hitting the highest since May.
  • Germany’s 10-year yield rose three basis points to 0.54 percent.
  • Britain’s 10-year yield climbed two basis points to 1.63 percent.
  • Italy’s 10-year yield declined seven basis points to 2.87 percent, the biggest fall in more than a week.

Commodities

  • West Texas Intermediate crude rose 0.3 percent $72.28 a barrel, while Brent rose 0.7 percent to $81.74.
  • Gold advanced 0.2 percent to $1,201.13 an ounce.

©2018 Bloomberg L.P.