Catalonia relief nudges stocks to fresh high

NEW YORK: US Treasury prices rose and world stocks were up slightly yesterday ahead of the release of minutes from the Federal Reserve’s September policy meeting, while the euro rose after Catalonia held off on moving towards independence.

Spanish stocks rallied and the euro reached a twoweek high after Catalonia’s leader, Carles Puigdemont, declined to make a formal independence declaration on Tuesday to allow for talks with Madrid. That disappointed many pro-independence supporters but pleased financial markets.

The euro move helped push the dollar index down for the fourth day in row. The dollar was weak ahead of Fed minutes and on uncertainties about the prospects for US tax reform. Wall Street’s major stock indexes treaded water as a jump in shares of consumer staples was offset by a drop in financials a day before the start of the quarterly reporting season.

“Third-quarter results of large banks are expected to be tepid,” said Stephen Biggar, an analyst at Argus Research. “Trading revenue (will be) down due to low volatility and loan growth remaining flat to slightly negative.” The Dow Jones Industrial Average rose 15.77 points, or 0.07 percent, to 22,846.45, the S&P 500 gained 0.47 points, or 0.02 percent, to 2,551.11 and the Nasdaq Composite added 5.49 points, or 0.08 percent, to 6,592.74.

A 1.3-percent jump in Spain’s IBEX more than reversed its decline in the previous session while the broader equities market showed a lackluster performance.

The pan-European FTSEurofirst 300 index lost 0.08 percent and MSCI’s gauge of stocks across the globe gained 0.10 percent. Meanwhile, the US dollar fell to a two-week low against a basket of currencies ahead of the Fed’s release of its September policy meeting minutes where it decided to pare the central bank’s $4.5trillion balance sheet.

The dollar fell yesterday to a two-week low against a basket of currencies, ahead of the US Federal Reserve’s release of the minutes on its September policy meeting where policy-makers decided to pare the central bank’s $4.5 trillion balance sheet.

While the Fed revealed plans to reduce its vast holdings of Treasuries and mortgage-backed securities, the minutes may provide clues on whether a US interest rate hike is planned for December, analysts said. The Fed will release minutes of its Sept. 19-20 meeting at 2 pm EDT (1800 GMT).

Also, US President Donald Trump’s spat with Tennessee Senator Bob Corker, an influential fellow Republican, raised concerns that Trump’s tax reform push may be in jeopardy. “Squabbles surrounding Trump’s efforts come as no surprise, but it is still not helping the dollar,” said Yukio Izhizuki, senior currency strategist at Daiwa Securities in Tokyo.

Meanwhile, US Treasuries investors were betting on a rate hike in December ahead of the Fed minutes. “Speakers have been out in force recently and I think they’ve been pretty clear that a December rate hike is certainly on the table,” said Thomas Simons, a money market economist at Jefferies in New York.

Japan’s Nikkei 225 index closed at a new 21-year high, rising 0.3 percent to 20,881.27, a level it hasn’t seen since December 1996. South Korea’s Kospi rose 1 percent to 2,458.16 and Australia’s S&P/ASX 20 0.6 percent to 5,770.10. The Shanghai Composite in mainland China edged up 0.2 percent to 3,388.28 but Hong Kong’s Hang Seng gave up earlier gains to end 0.4 percent lower at 28,389.57. Shares in Southeast Asia were mixed.

Benchmark 10-year notes last rose 3/32 in price to yield 2.3356 percent, from 2.345 percent late on Tuesday. The 30-year bond last rose 10/32 in price to yield 2.8649 percent, from 2.881 percent late on Tuesday. Oil prices gave back earlier gains. US crude fell 0.41 percent to $50.71 per barrel and Brent was last at $56.24, down 0.65 percent on the day.

Gold prices were barely up after declining in the previous day’s session. Spot gold percent to $1,287.92 an ounce. —Reuters