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Stocks Climb on Powell's Dovish Stance; Oil Rises: Markets Wrap - Financial Post

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Bloomberg News

Bloomberg News

Sunil Jagtiani

(Bloomberg) — Stocks rose Monday and Treasuries held an advance on Jerome Powell’s signal of a cautious and gradual withdrawal of pandemic-era Federal Reserve policy support. Oil climbed as a hurricane roils U.S. energy supplies.

Shares gained in Japan, Australia and South Korea. U.S. futures edged up after a record Wall Street close in the wake of Chair Powell’s Jackson Hole speech. Powell said the Fed may start paring bond purchases this year but is in no hurry to raise interest rates and will be guided by data on Covid-19 risks. 

Powell didn’t give a specific timeline for scaling back stimulus. Traders are awaiting U.S. jobs data this week to assess whether the recovery merits an earlier tapering. Strong figures could extend the first weekly steepening of the Treasury yield curve since July. The dollar held a drop.

Commodity markets are focused on Hurricane Ida, which imperils U.S. oil, natural gas and fuel supplies. Crude and U.S. gasoline futures pushed higher.

Central banks are seeking to reduce monetary policy support in part to keep a lid on inflation, while at the same time nurturing economic recoveries facing challenges from the delta virus strain. Markets so far are reposing confidence in the ability of policy makers to pull off a delicate balancing act.

“There is little doubt Powell was dovish, relative to market pricing and positioning,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note. Weston remains “positive on risk for now” but added a slowing global economy and Fed policy normalization remain threats to the outlook.

In Asia, Beijing’s regulatory broadside against private industry remains a key focus area. The latest step is a two-month campaign to crack down on commercial platforms and social media accounts that post finance-related information deemed economically harmful.

Elsewhere, gold held gains and Bitcoin was trading around $49,000.

Here are some key events to watch this week:

The U.S. plans to pull out almost all American troops from Afghanistan TuesdayOPEC+ meeting on output WednesdayEuro zone manufacturing PMI WednesdayChina Caixin manufacturing PMI WednesdayU.S. jobs report Friday

For more market analysis read our MLIV blog.

Some of the main moves in markets:

Stocks

SP 500 futures rose less than 0.1% of 9:20 a.m. in Tokyo. The SP 500 rose 0.9%Nasdaq 100 futures increased 0.1%. The Nasdaq 100 rose 1%Japan’s Topix index added 0.8%Australia’s SP/ASX 200 climbed 0.4%South Korea’s Kospi gained 0.5%Hang Seng futures added 0.2% earlier

Currencies

The Japanese yen was at 109.80 per dollarThe offshore yuan traded at 6.4635 per dollarThe Bloomberg Dollar Spot index was steadyThe euro was at $1.1799

Bonds

The yield on 10-year Treasuries declined about one basis point to 1.30%Australia’s 10-year yield dropped two basis points to 1.17%

Commodities

West Texas Intermediate crude rose 0.6% to $69.16 a barrelGold was at $1,818.59 an ounce

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