Stocks across the globe rose on Tuesday for a seventh straight session, the longest upward streak of the year, while the pound wobbled against the dollar on expectations that European Union officials would give Britain a delay on Brexit negotiations.
Bets that the Federal Reserve will this week reinforce the market view that the U.S. tightening cycle is in the rear-view mirror have kept alive the bid on stocks, while the dollar index touched its lowest since March 1.
“U.S. stocks are nearing record highs once again as investors price in a cautious scenario for policy, considering the macroeconomic environment hasn’t changed much since the Fed paused in January,” wrote John Lynch, chief investment strategist for LPL Financial in a note.
Investors will particularly look to see whether policymakers have sufficiently lowered their interest rate forecasts to align more closely their “dot plot,” which shows individual policymakers’ rate views for the next three years, with market expectations.
The CitiFX U.S. economic surprise index, which measures economic data against expectations, has been negative for over a month and earlier in March touched its lowest since August 2017.
The Dow Jones Industrial Average fell 26.72 points, or 0.1 per cent, to 25,887.38, the S&P 500 lost 0.34 points, or 0.01 per cent, to 2,832.6 and the Nasdaq Composite added 9.47 points, or 0.12 per cent, to 7,723.95.
Ahead of the release of the federal budget, Canada’s main stock index dipped on Tuesday, as energy stocks reversed course and finished lower.
Despite a rise in oil prices, energy stocks lost 0.9 per cent, while the interest rate-sensitive financials sector inched down 0.3 per cent.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially down 63.27 points, or 0.39 per cent, at 16,188.10.
Healthcare sector, up 1.6 per cent, led the gains among the four major sectors trading higher. The sector was helped by rise in cannabis producers.
The pan-European STOXX 600 index rose 0.57 per cent and MSCI’s gauge of stocks across the globe gained 0.35 per cent.
Emerging market stocks rose 0.19 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.1 per cent higher, while Japan’s Nikkei lost 0.08 per cent.
In currency markets, sterling touched $1.3311 after slipping as low as $1.3241 as traders expected EU officials to give Britain a delay on Brexit negotiations, though the uncertainty kept the market volatile. Sterling was last trading at $1.3268, up 0.10 per cent on the day.
“The predominant notion adopted by the market is that as long as the worst-case scenario of hard Brexit is avoided by delaying Brexit, the pound is a buy on dips,” Rabobank strategists said in a note.
The dollar index fell 0.15 per cent, with the euro up 0.15 per cent to $1.1353.
“What we are seeing is the market positioning for potentially a more dovish tone tomorrow,” said Minh Trang, senior currency trader at California’s Silicon Valley Bank, speaking about expectations of what the Fed’s statement will be like on Wednesday.
The Japanese yen strengthened 0.03 per cent versus the greenback at 111.40 per dollar.
Among commodities, oil prices were largely steady around four-month highs on Tuesday on expectations that OPEC would continue production cuts till the end of the year, and ahead of weekly U.S. data that was forecast to show a build in crude stocks.
Brent crude oil futures settled 7 cents higher at $67.61 a barrel, the global benchmark’s highest settlement since November 2018.
U.S. West Texas Intermediate (WTI) futures touched its highest since November at $59.57 a barrel but finished at $59.03 a barrel, falling 6 cents.
Oil prices have rallied more than 20 percent after the Organization of the Petroleum Exporting Countries and its allies began to curb supplies since the start of the year.
After a short gathering in Azerbaijan, the producer group on Monday scrapped its planned meeting in April and will decide instead whether to extend output cuts in June, once the market has assessed the impact of U.S. sanctions on Iran and the crisis in Venezuela.
Some analysts expressed concern that the cancellation was related to tension between Saudi Arabia, the de facto head of OPEC, and Russia, the largest producing non-member of the group that agreed to production cuts last year.
“OPEC and non-OPEC producers are determined to get the supply and demand dynamics better into balance, recognizing that U.S. shale production is going to continue to rise,” said Andy Lipow, president of Lipow Oil Associates in Houston.
Precious metal palladium, used in things like car catalytic converters, topped the $1,600 an ounce mark for the first time on supply concerns.
Palladium was last up 0.92 per cent to $1,598.02 an ounce. Prices have nearly doubled since their mid-August lows and have surged more than 25 per cent this year.
Spot gold added 0.3 per cent to $1,306.77 an ounce. U.S. gold futures gained 0.39 per cent to $1,306.60 an ounce.
Copper rose 0.56 per cent to $6,461.00 a tonne.
U.S. Treasury yields were little changed as the Fed’s interest rate policy-setting meeting began. Benchmark 10-year notes last fell 3/32 in price to yield 2.6105 per cent, from 2.601 per cent late on Monday.
The 30-year bond last fell 9/32 in price to yield 3.0246 per cent, from 3.01 per cent late on Monday.
Reuters