European and Asian equities traded mixed, while Treasuries halted a recent selloff as investors assessed the impact of the U.S. federal government’s partial shutdown.
The greenback was steady as the disruption dragged into a third day after Senate leaders failed to end the impasse. The euro gained on optimism that Germany’s Angela Merkel had made a breakthrough toward her fourth term. Traders monitored China’s appetite for currency strength as the yuan was close to the symbolically key level of 6.4 per dollar. South Africa’s rand rose to its strongest level since 2015 on speculation over how much longer President Jacob Zuma will remain in power.
Shutdown, What Shutdown?
Stocks show no ill effects 12-months out from past government shutdowns
Equity markets have largely shrugged off America’s government drama as the optimism over economic growth and expanding profits that pushed many stock indexes to all-time highs last week continues to grab the spotlight. Commentary from policy makers after central bank decisions in Europe and Japan this week may provide the next catalyst after a surge in government bond yields prompted by signals unprecedented stimulus will soon be wound back.
“Due to the limited economic impact, markets should be largely unaffected,” by the government shutdown, said Poul Kristensen, portfolio manager at New York Life Investment Management. “If there is a little pullback, we believe it will be a buying opportunity. The last time the government shut down in 2013, markets moved higher.”
Elsewhere, Brent oil rose, halting its decline from the highest level in more than three years as OPEC and Russia said output cuts will continue until the end of the year and signaled a readiness to coordinate beyond that.
Terminal users can read more in our markets blog.
Here’s what to watch out for this week:
Barring any last minute changes in Washington, President Donald Trump will join world leaders and senior executives in Davos, Switzerland, for the annual World Economic Forum.
Central banks: Bank of Japan monetary policy decision and briefing on Tuesday; European Central Bank rate decision on Jan. 25
U.K. Prime Minister Theresa May’s Brexit bill is set to be taken up in the House of Lords.
Earnings season is in full swing: Netflix, UBS Group, and Halliburton are due to post results Monday, with Novartis, General Electric, Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks, Hyundai Motor and Fanuc Corp. coming later in the week.
And these are the main moves in markets:
The Stoxx Europe 600 Index fell less than 0.05 percent as of 8:15 a.m. London time.
The MSCI All-Country World Index climbed 0.1 percent to the highest on record.
The MSCI Emerging Market Index gained 0.4 percent, with its seventh consecutive advance.
Futures on the S&P 500 Index dipped 0.1 percent.
The euro climbed 0.2 percent to $1.2241.
The Bloomberg Dollar Spot Index fell 0.1 percent, close to its lowest in about three years.
The British pound increased 0.3 percent to $1.3899, the strongest in 19 months.
The yield on 10-year Treasuries decreased one basis point to 2.65 percent, the biggest dip in more than a week.
Germany’s 10-year yield advanced less than one basis point to 0.57 percent.
Brent crude advanced 0.4 percent to $68.88 a barrel, the biggest gain in a week.
West Texas Intermediate crude increased 0.4 percent to $63.63 a barrel, the largest climb in more than a week.
Gold fell less than 0.05 percent to $1,331.72 an ounce.