The dollar gained and U.S. stocks rose after two down weeks as Congress took a holiday break from tax talks and the closely watched Alabama senate election neared. Gold tumbled.
The Standard & Poor’s 500 Index climbed at the start of a truncated Thanksgiving week as investors weigh whether there are sufficient drivers to continue the march to historic highs. Strong earnings and solid global growth are balanced against lofty valuations in some markets, as well as the negative signal from the U.S. yield curve.
“Very near term, stocks face cross currents associated with year-end tax-related strategies as well as a potential postponement in tax reform legislation that could cause the pause in the rally to linger,” Bruce Bittles, chief investment strategist at Baird, said in a note Monday. “But any weakness that does develop is anticipated to be limited in both time and price.”
As the dollar climbed, precious metals declined, with gold recording its biggest drop in almost eight weeks. Silver and platinum also fell. West Texas intermediate crude retreated after surging the most in two weeks in the previous trading session, sinking below $56 a barrel.
Treasuries edged lower. Federal Reserve Chair Janet Yellen is scheduled to speak this week and the Fed minutes are due out Wednesday. That will allow investors to gauge officials’ eagerness to boost the benchmark interest rate in December, which is widely expected by the market.
In Europe, a month of exploratory coalition talks in Germany ended in a dramatic collapse on a dispute over migration policy. The upshot is that the region’s dominant country remains hamstrung on the global stage, potentially affecting everything from policy toward the European Union, Turkey and Russia to government spending. Chancellor Angela Merkel said that she’s skeptical about forming a minority government and would prefer new elections if she can’t put together a majority.
Nevertheless, the Stoxx Europe 600 Index advanced and Germany’s DAX rebounded from a seven-week low, with investors judging that the talks’ failure won’t threaten the economy. The euro declined.
Pound and gilts traders will focus on a potential downgrade to the U.K. growth outlook this week and the government’s efforts toward agreeing on a Brexit “divorce” bill. Sterling was boosted on Monday by reports that the U.K. was preparing to make an enhanced divorce bill offer to the EU ahead of crucial talks starting next month.
Euro Drops on German Impasse, China Stocks Slide: Markets Wrap
November 20, 2017 by Leave a Comment