Bonds Gain After ECB QE Report; Stocks Advance: Markets Wrap – Bloomberg

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Bonds in Europe gained after a report that the European Central Bank may continue asset purchases for at least nine months even as it reduces the amount of buying. Stocks advanced after data on Chinese exports underscored the resilience of the global recovery.

The Stoxx Europe 600 Index climbed, led by steelmakers and miners as most industrial metals gained. The dollar nudged lower as investors reconsider the pace of U.S. monetary tightening and await the latest inflation data. Sterling extended a rally after the German newspaper Handelsblatt reported that chief EU negotiator Michel Barnier may offer the U.K. a two-year transition period to stay in the union. WTI crude climbed back above $51 a barrel, and Bitcoin surged to a fresh record above $5,600.

European Central Bank officials are considering reducing quantitative easing to 30 billion euros ($36 billion) a month from the current pace of 60 billion euros, according to officials familiar with the debate. While the central bank’s governors are split on the need to identify an end date for purchases, a pledge to keep buying bonds until September — with the proviso that it could be extended if needed — may offer grounds for compromise, they said.

In the U.S., the Trump administration’s tax plan clouded up as the president was said to voice frustration with certain aspects of the existing framework. Some Congressional Republicans have aired concerns, though Treasury Secretary Steven Mnuchin reiterated his confidence that a plan will get passed this year. Data Friday on prices and retail sales may give more clues about the Fed’s policy path amid a debate about whether low inflation is temporary or permanent.

Remi Olu-Pitan, fund manager at Schroders, discusses the outlook for the pound amid Brexit uncertainty.

Daybreak: Europe. (Source: Bloomberg)

Terminal subscribers can read more in our Markets Live blog.

Highlights this week:

  • Consumer inflation the U.S. probably quickened to an annual pace of 2.3 percent inn September, from 1.9 percent the month before, according to a Bloomberg survey of economists. Also due Friday is data on retail sales.

Here are the main moves in markets:

Asia

  • Japan’s Nikkei 225 was up 1 percent, finishing the week at the highest since 1996. Fast Retailing Co., the gauge’s biggest component, climbed 5.5 percent as overseas sales rose. The broader Topix index rose 0.5 percent.
  • Hong Kong’s Hang Seng Index was little changed, while China’s benchmark gained 0.2 percent and South Korea’s Kospi index fell 0.1 percent.
  • The MSCI All Country World Index was on track for its fifth week of gains to an all-time high.

Stocks

  • The Stoxx Europe 600 Index rose 0.3 percent as of 8:21 a.m. London time, the highest in more than 16 weeks. 
  • The U.K.’s FTSE 100 Index decreased 0.4 percent. 
  • Germany’s DAX Index gained less than 0.05 percent to the highest on record.
  • Futures on the S&P 500 Index dipped less than 0.05 percent.

Currencies

  • The Bloomberg Dollar Spot Index decreased less than 0.05 percent. 
  • The euro dipped 0.1 percent to $1.1823. 
  • The British pound gained 0.3 percent to $1.3301, hitting the strongest in more than a week with its fifth consecutive advance. 
  • The Japanese yen gained 0.3 percent to 111.89 per dollar.

Bonds

  • The yield on 10-year Treasuries decreased less than one basis point to 2.31 percent, the lowest in almost two weeks. 
  • Germany’s 10-year yield dipped three basis points to 0.42 percent, the lowest in more than two weeks. 
  • Britain’s 10-year yield dipped two basis points to 1.363 percent. 
  • Spain’s 10-year yield declined two basis points to 1.613 percent.

Commodities

  • West Texas Intermediate crude rose 1.2 percent to $51.21 a barrel. 
  • Gold increased 0.2 percent to $1,296.92 an ounce, reaching the highest in more than two weeks. 
  • Copper climbed 0.2 percent to $3.13 a pound, hitting the highest in almost five weeks with its fifth consecutive advance.

— With assistance by Adam Haigh