Stocks Post Longest Rally Since August; Oil Gains: Markets Wrap

(Bloomberg) -- Rising prospects for a robust federal spending package, coupled with a slowdown in virus infection rates, sent U.S. stocks higher for the sixth straight session.

The S&P 500 Index rose 0.7% to an all-time high, spurred by fresh signs the Biden administration is committed to passing a sizable aid bill to address unemployment. An increase in vaccination numbers boosted optimism that the economy will take off later this year. Treasuries started the day lower, but mostly erased losses on speculation recent declines had gone too far with the latest economic data showing some weakness.

Commodities prices pointed to renewed optimism in the global economic recovery. Brent oil advanced above $60 a barrel for the first time in more than a year, while copper climbed for a second day and iron ore prices rebounded. Bitcoin jumped to a record after Tesla Inc. bought $1.5 billion of the cryptocurrency.

“As people feel safer, investors can expect the economy to experience a rebound that should contribute to revenue and earnings growth as the economy reflates,” John Stoltzfus, chief investment strategist at Oppenheimer, wrote to clients.

In Europe, Italian equities outperformed as Mario Draghi set about forming a new national government. Dialog Semiconductor Plc shares jumped after the company agreed to be acquired by Renesas Electronics Corp. In Japan, the Topix index ended Monday at the highest since 1991 amid reports the government may lift its state of emergency early for some areas.

Investors are taking comfort from the continued rollout of vaccines and data suggesting a declining trend in infections in countries like the U.S. A Citigroup Inc. gauge of global risk aversion dropped to its lowest since the pandemic first roiled markets last year. Weaker-than-forecast U.S. jobs data Friday reinforced economic risks as the pandemic lingers, but also highlighted the case for further stimulus.

“The vaccine roll-out programs certainly suggest that the reflation trade has legs but central banks seem to want to ensure that expectations are kept in check,” Jane Foley, head of foreign exchange strategy at Rabobank, said on Bloomberg TV. “This suggests a choppy ride.”

President Joe Biden is pushing for a mammoth $1.9 trillion economic relief measure. Some commentators, such as former Treasury Secretary Larry Summers, have raised questions about the size of the package and risks such as much faster inflation.

Here are some key events coming up:

• Earnings season continues with companies including Honda Motor, Cisco Systems, Societe Generale and L’Oreal.
• EIA crude oil inventory report comes Wednesday.
• Sweden will set monetary policy on Wednesday.
• Federal Reserve Chair Jerome Powell will speak on a webinar Wednesday.
• The U.S. consumer price index comes Wednesday.
• Lunar New Year public holidays begin in nations across Asia, with China breaking for a week.
• Bank of Russia’s policy decision comes Friday.

These are the main moves in markets

Stocks

• The S&P 500 Index increased 0.7% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index gained 0.3%.
• The MSCI Asia Pacific Index rose 0.9%.
• The MSCI Emerging Market Index climbed 0.3%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%.
• The euro was little changed at $1.2051.
• The onshore yuan strengthened 0.3% to 6.4486 per dollar.
• The Japanese yen weakened 0.2% to 105.21 per dollar.

Bonds

• The yield on 10-year Treasuries rose one basis point to 1.17%.
• The yield on two-year Treasuries climbed less than one basis point to 0.11%.
• The 30-year rate fell one basis point to 1.96%.
• Germany’s 10-year yield was little changed at -0.45%.
• Britain’s 10-year yield fell one basis point to 0.47%.
• Japan’s 10-year yield rose one basis point to 0.071%.

Commodities

• West Texas Intermediate crude gained 2% to $58 a barrel.
• Brent crude gained 2.1% to $60.60 a barrel.
• Gold futures strengthened 1% to $1,831.98 an ounce.

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