U.S. Stocks Climb Before Central Bank Decisions
U.S. stock indexes finished higher in listless trading Tuesday as investors put the U.S.-North Korea meeting in the rear-view and looked forward to this week’s big central bank decisions.
Approaching the close, the S&P 500 Index recovered from session lows amid below-average volume. Yields on 10-year Treasuries climbed, while the dollar gained and the euro fell. Safe-haven assets including the yen and gold edged lower after President Donald Trump and Kim Jong Un signed a document pledging to work toward peace on the Korean peninsula.
The summit and last weekend’s rancorous G-7 meeting have yielded the spotlight to central banks, with a seemingly certain Federal Reserve rate increase on Wednesday, plus the prospect of a hawkish European Central Bank tilt on Thursday. The Bank of Japan’s policy decision is due Friday. Tuesday’s U.S. inflation figures — which were in line with estimates — may reignite the four-hikes-in-2018 debate ahead of the Fed’s decision.
“The main issues are the Federal Reserve, the ECB and the Bank of Japan, not really the tweets regarding trade issues — and that’s what we’re all waiting for,” Derek Green, wealth adviser at Titus Wealth Management in California, said by phone. “Maybe it’s a calm before the storm. Volume will definitely pick up starting tomorrow. You’ve got three press conferences in three days.”
The Stoxx Europe 600 Index retreated after modest gains for many Asian shares failed to ignite the MSCI Asia Pacific Index. The British pound rose after Prime Minister Theresa May fended off a rebellion by pro-EU Conservatives and won a key Brexit vote, only to give up most of that gain.
Elsewhere, West Texas crude fluctuated around $66 a barrel after Iraq joined other OPEC members in resisting a push to boost oil supplies. The Turkish lira led decliners in emerging-market currencies ahead of the possible U.S. rate increase, which could suck more cash from developing nations.