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Stocks Steady as Economic Concerns Ease

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07/10/2017 | 03:55pm CET
By Riva Gold and Ese Erheriene 

U.S. stocks were little changed Monday as government bond markets showed signs of stabilizing after a recent selloff.

The Dow Jones Industrial Average slipped 27 points, or 0.1%, to 21387 shortly after the opening bell. The S&P 500 added 0.1%, and the Nasdaq Composite gained 0.2%.

Friday's gains on Wall Street rippled over to Asia, lifting shares of banks and technology companies, while the Stoxx Europe 600 rose 0.3%, led by the income-paying utilities, food and beverage and real-estate sectors, which tend to move opposite to bond yields.

On Monday, 10-year Treasury yields fell to 2.374% from 2.393% on Friday, their highest settlement in nearly two months, while 10-year German bund yields edged down to 0.537% from 0.569%. Yields move inversely to prices.

Signs of tighter monetary policy ahead had put pressure on government bond markets around the world over the past two weeks, rattling the stock market.

"Monetary policy is definitively getting less stimulative," Jason Pride, director of investment strategy at Glenmede. As long as the pace of rate rises is slow, however, stocks should still be stable even if returns are more muted, he said.

Central banks are likely to remain in focus this week, with the Bank of Canada widely expected to raise rates for the first time in seven years and Federal Reserve Chairwoman Janet Yellen set to offer semiannual testimony before congressional committees on Wednesday and Thursday.

The U.S. second-quarter earnings season will also begin in earnest with investors expecting a roughly 6% gain in earnings per share across the S&P 500, according to CFRA Research.

In Europe Monday, data showed German exports reached a record high in May, lifting the benchmark DAX index 0.5%. Mining companies underperformed, tracking declines in metals prices, while Brent crude oil swung between gains and losses and was last down 0.5% at $46.46 a barrel.

Earlier, equity markets were broadly higher in Asia after a strong U.S. jobs report Friday boosted the dollar and U.S. stocks, particularly shares of financial companies.

Japan's Nikkei Stock Average rose 0.8% after closing at its lowest level in three weeks on Friday. The dollar strengthened against the yen, topping Yen114 -- a level not seen in two months -- which helped propel local exporter stocks.

Bank of Japan Gov. Haruhiko Kuroda said he was ready to make appropriate policy adjustments if necessary to maintain inflation, putting the currency under pressure. The dollar was last up 0.2% against the yen.

Hong Kong's Hang Seng added 0.6% as index heavyweight HSBC advanced, while Australia's S&P/ASX 200 rose 0.4%, spurred by gains in bank stocks.

Chinese shares were held back by concerns about the pace of initial public offerings picking up. Over the weekend, Chinese regulators cleared as many as nine IPOs, putting some pressure on local stocks as investor attention turns toward new issues. The Shanghai Composite fell 0.2%, while the Shenzhen Composite, where more new companies list, fell 0.6%.

Data released Monday showed China's producer prices held steady in June, ending a three-month deceleration, while consumer inflation was also unchanged from May.

The start of trading was delayed in both India and Indonesia on Monday morning for what is being said were separate technical issues. Investors seemed unmoved as India's Sensex stock index climbed to record highs, rising 1.1%. Indonesia's JSX edged down 0.7%.

Megumi Fujikawa and Kevin Kingsbury contributed to this article.

Write to Riva Gold at [email protected] and Ese Erheriene at [email protected]

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