Dollar Drops as Treasuries Climb; Oil Extends Gain: Markets Wrap

The dollar took a break from its rally on Thursday, declining as traders confronted potential catalysts from political risks to missiles in the Middle East. Stock markets were defiant, with European equities mostly steady and U.S. futures following Asian shares higher.

Ten-year Treasury yields, which have been driving up the greenback and exacting pain on emerging markets, dipped back below 3 percent to push the dollar toward its first drop in five days. The Stoxx Europe 600 Index drifted on what is a public holiday in various parts of the region -- markets are closed in countries including Switzerland, Sweden, and Austria. U.S. stock futures advanced ahead of a report on consumer prices. Oil extended its climb in New York. The pound fluctuated before a rate decision.

Terminal users can follow the Bank of England decision on our TOPLive blog.

The news agenda is offering no respite to investors this week, with tension between Israel and Iran mounting just days after U.S. President Donald Trump roiled the international community with his decision to ditch a nuclear accord with the Islamic Republic. Meanwhile, the stage is set for a populist government to form in Italy, and traders are rapidly coming to terms with an election upset in Malaysia. Many will now be looking to American inflation data as a welcome diversion.

Earlier in Asia, equities were broadly higher, with Japanese shares rising as the yen slipped. Malaysian markets are closed, though trading in non-deliverable forwards suggested the ringgit will tumble Monday in the wake of the surprise ouster of the country’s ruling party.

Malaysia’s 2045-maturity dollar bond also declined, but developing markets more broadly signaled stability. The MSCI Emerging Market Index rallied for a fourth day. And elsewhere, the New Zealand dollar slid after the central bank left the door open to an interest rate cut as inflation remains contained.

Terminal users can read more in our markets live blog.

Some key events coming up this week:

• The Bank of England decides on policy Thursday.
• U.S. inflation data for April are also due.

And these are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index decreased less than 0.05 percent as of 9:42 a.m. London time.
• Futures on the S&P 500 Index advanced 0.2 percent, reaching the highest in more than three weeks on its sixth consecutive advance.
• The MSCI All-Country World Index increased 0.1 percent to the highest in three weeks.
• The U.K.’s FTSE 100 Index gained 0.2 percent to the highest in more than 15 weeks.
• Germany’s DAX Index jumped 0.6 percent to the highest in 14 weeks.
• The MSCI Emerging Market Index jumped 0.7 percent to the highest in more than a week on the biggest increase in almost two weeks.
• The MSCI Asia Pacific Index jumped 0.5 percent to the highest in more than a week on the largest climb in more than a week.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2 percent, the first retreat in a week.
• The euro gained 0.1 percent to $1.1864, the first advance in a week.
• The British pound dipped 0.1 percent to $1.3534.
• The Japanese yen decreased 0.1 percent to 109.82 per dollar, the weakest in more than a week.

Bonds

• The yield on 10-year Treasuries fell two basis points to 2.99 percent, the biggest fall in a week.
• Germany’s 10-year yield decreased less than one basis point to 0.56 percent.
• Britain’s 10-year yield declined less than one basis point to 1.457 percent, the biggest fall in a week.

Commodities

• West Texas Intermediate crude gained 0.6 percent to $71.57 a barrel, the highest in more than three years.
• Copper jumped 0.6 percent to $3.08 a pound, the biggest increase in more than a week.
• Gold climbed less than 0.05 percent to $1,312.84 an ounce.