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Stocks, Bonds Climb as Draghi Fuels Stimulus Hopes: Markets Wrap.

Stocks climbed and bonds rallied on Tuesday as comments from ECB officials added fuel to investors’ hopes for easier monetary policies from the world’s biggest central banks....................

Futures on the S&P 500, Nasdaq 100 and Dow Jones indexes advanced along with the Stoxx Europe 600, while Japan’s Topix bucked the trend as most Asian gauges also rose. The euro turned weaker after European Central Bank President Mario Draghi said additional stimulus may be needed if the economic outlook doesn’t improve. That move pared slightly when President Donald Trump weighed in, accusing the ECB in a tweet of weakening its currency to make the region’s exports more competitive. Three of the central bank’s officials told Bloomberg an interest-rate cut would probably be the first step in any stimulus.
At the same time, data showed investor confidence in Germany’s economic outlook worsened dramatically in June, adding to expectations of central bank support. Treasuries and European bonds rallied, led by Italian and Greek notes. Oil dropped, with OPEC nations still unable to agree on a date for their next meeting, adding to uncertainty over whether production cuts would be extended.
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With central banks around the world moving toward looser policy as trade tensions weigh on the global economy, investors are looking for signals from the Fed tomorrow on the likelihood of interest-rates cuts. That’s the headline act in a week that includes the ECB gathering in Portugal, as well as Bank of England and Bank of Japan policy announcements. Central banks in Australia, Russia, India and Chile have recently loosened policy. The Reserve Bank of Australia said Tuesday that further easing is more likely than not.
Here are some key events coming up:
  • The Federal Reserve, Bank of Japan and Bank of England all set monetary policy, along with central banks in Norway, Brazil, Taiwan and Indonesia.
  • The Fed meeting begins Tuesday with a decision and press conference the next day. Officials are expected to debate a rate cut to shelter the U.S. economy, in part, from the fallout caused by escalating trade disputes.
  • In the U.K. Tuesday there will be a second ballot on the leadership contest to choose Theresa May’s successor as leader of the country’s ruling party.
  • Final May CPI data for the euro zone are due Tuesday and for Britain on Wednesday.
  • U.K. retail sales are set for release on Thursday.
These are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index jumped 0.9% as of 7:19 a.m. New York time.
  • Futures on the S&P 500 Index gained 0.5% on the biggest rise in more than a week.
  • France’s CAC 40 Index climbed 1.4% on the largest increase in more than a week.
  • Hong Kong’s Hang Seng Index gained 1% on the biggest rise in more than a week.
  • The MSCI Emerging Market Index advanced 0.6%, the first advance in a week.

Currencies

  • The Bloomberg Dollar Spot Index gained less than 0.05% on its fifth consecutive advance.
  • The Japanese yen jumped 0.2% to 108.29 per dollar.
  • The euro fell 0.2%.
  • South Africa’s rand jumped 1.1%.

Bonds

  • The yield on 10-year Treasuries decreased five basis points to 2.04% on the biggest tumble in more than two weeks.
  • Britain’s 10-year yield sank five basis points to 0.8%.
  • Italy’s 10-year yield sank 14 basis points to 2.16%.
  • ......................
  • Gold advanced 0.6% to $1,347.53.
  • West Texas Intermediate crude dipped 0.1% to $51.88 a barrel.
Investor sentiment for WTI crude has deteriorated fast since late April
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