A gauge of global stock markets edged higher on Monday to build on monthly gains and benchmark government bond yields hovered near multi-year lows as investors girded for developments later in the week from central banks in the United States and elsewhere.
MSCI’s gauge of stocks across the globe gained 0.05 per cent, as increases for Wall Street’s main indexes led by the tech-heavy Nasdaq countered some weakness in Europe.
The U.S. Federal Reserve is set to give its policy statement on Wednesday with expectations running high the central bank is poised to cut interest rates this year.
The European Central Bank is also holding a forum in Portugal this week, with the Bank of Japan also set to hold its policy meeting later in the week.
“With so much coming later this week as far as central bank announcements, I think investors are basically in a holding pattern,” said Chris Gaffney, president of world markets at TIAA Bank.
The Fed is expected to leave borrowing costs unchanged at a policy meeting this week but possibly lay the groundwork for a rate cut later this year, with concerns about the global economy fueled by a heightening U.S.-China trade war.
“I think expectations have been set of a rate cut have been overdone so it will be interesting to see just how dovish the tone is,” Gaffney said.
The New York Federal Reserve said its gauge of business growth in New York state posted a record fall this month to its weakest level in more than 2-1/2 years, suggesting an abrupt contraction in regional activity.
Canada’s main stock index rose on Monday, as the energy sector jumped despite a decline in oil prices
The Toronto Stock Exchange’s S&P/TSX composite index was up 51.54 points, or 0.32 per cent, at 16,353.45.
The energy sector erased early losses and closed 1.5 per cent higher. Enerplus Corp. rose 6.6 per cent, while Encana Corp. was up 3.4 per cent.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 1.1 per cent.
Healthcare sector was up 1.2 per cent as shares of cannabis producers rose. Canopy Growth Corp. and Aurora Cannabis Inc. supported the sector.
On Wall Street, the Dow Jones Industrial Average rose 22.37 points, or 0.09 per cent, to 26,111.98, the S&P 500 gained 2.58 points, or 0.09 per cent, to 2,889.56, and the Nasdaq Composite added 48.37 points, or 0.62 per cent, to 7,845.02.
The pan-European STOXX 600 index lost 0.09 per cent. Shares of Lufthansa plunged 12 per cent after the German airline lowered its profit outlook for the full year 2019 citing intense competition from low-cost rivals.
U.S. Treasury yields slipped in choppy trading, weighed down by softer-than-expected U.S. economic data and persistent pressure arising from the trade conflict with China.
Benchmark 10-year notes last rose 2/32 in price to yield 2.0872 per cent, from 2.094 per cent late on Friday.
Germany’s 10-year bund yield, the benchmark for Europe, was around -0.24 per cent.
The U.S. dollar index fell 0.09 per cent, with the euro up 0.16 per cent to $1.1225.
Oil prices fell more than 1 per cent on Monday after more poor Chinese economic figures fanned fears of lower worldwide oil demand.
Brent crude futures lost $1.07 to settle at $60.94 a barrel, a 1.73 percent loss. U.S. West Texas Intermediate (WTI) crude futures fell 58 cents to settle at $51.93 a barrel, a 1.10 percent loss.
Prices have fallen around 20 per cent since a 2019 high reached in April, in part due to concerns about the U.S.-China trade war and disappointing economic data.
China’s industrial output growth unexpectedly slowed to a more than 17-year low, data from the National Bureau of Statistics showed on Friday. It grew 5.0 per cent in May from a year earlier, missing analysts’ expectations of 5.5 per cent and well below April’s 5.4 per cent.
U.S. President Donald Trump and China’s President Xi Jinping could meet at the G20 summit in Japan later this month. Trump has said he would meet with Xi at the summit, although China has not confirmed the meeting.
“All the major reporting agencies are reporting that demand is going to be weaker,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “That has played into the market malaise. Things we would normally rally off of, we’re not.”
Bank of America Merrill Lynch lowered its Brent price forecast to $63 per barrel from $68 a barrel for the second half of 2019 on faltering demand.