Dollar rises with yields on tax plan, stocks jump

Bloomberg.- The dollar made a strong start to the week, rising with Treasury yields and U.S. stock futures on the back of progress for the Republican tax-overhaul plan. European equities rebounded after Friday’s slump, though it was a mixed picture across Asian gauges.

The greenback recovered Friday’s losses and the yield on benchmark U.S. debt climbed back toward 2.4 percent after the Senate passed corporate tax-cut legislation early on Saturday drew focus away from the investigation into connections between President Donald Trump’s aides and Russia. The Stoxx Europe 600 Index headed for the first gain in three days as all sectors advanced, while the MSCI Asia Pacific Index was stable following a drop for Japan’s Topix and jump for South Korea’s Kospi. The pound reversed a decline to rally after European Union chief negotiator Michel Barnier told the region’s lawmakers that a breakthrough is likely on Monday in Brexit talks.

The positive stock moves will be welcomed by many investors after news from Washington rocked markets on Friday. The evolving investigation into potential connections between Trump’s campaign and Russian meddling in the 2016 U.S. election remains a threat. But with global equities still hovering near all-time highs, traders may be seizing on the potential of tax cuts boosting growth in the world’s largest economy as reason to sustain the bull market.

As the dollar gained, the euro slipped versus most major peers. Traditional safe-haven assets fell, with gold resuming its downward path after a jump on Friday and the yen and Swiss franc both slumping. West Texas oil fell below $58 a barrel.

Terminal customers can read more in our Markets Live blog.

Here are some of the key events facing markets in the coming days:

– On Monday, euro-area finance ministers discuss the future of the region, vote for a new president and debate Greece’s bailout review in Brussels.
– The European Commission College of Commissioners discusses Brexit on Wednesday and will likely make its recommendation on whether sufficient progress has been made to move negotiations onto the future relationship.
– The U.S. faces a partial government shutdown after money runs out on Dec. 8 if Congress can’t agree on a spending bill by then.
– U.S. employers probably hired at a robust pace in November as the unemployment rate held at an almost 17-year low. The Labor Department’s jobs report next Friday may also show a bump up in average hourly earnings.
– Countries setting monetary policy this week include Australia, Brazil, Canada, India and Poland.

These are the main moves in markets:

Stocks

– The Stoxx Europe 600 Index surged 1 percent as of 7:15 a.m. New York time, the largest jump in more than five weeks.
– The MSCI World Index of developed countries climbed 0.2 percent.
– The MSCI Asia Pacific Index was unchanged at the lowest in more than two weeks.
– Japan’s Nikkei 225 Stock Average decreased 0.5 percent, the biggest dip in two weeks.
– The MSCI Emerging Market Index increased 0.6 percent, the largest climb in almost two weeks.
– The U.K.’s FTSE 100 Index increased 0.3 percent.
– Futures on the S&P 500 Index climbed 0.6 percent to the highest on record.

Currencies

– The Bloomberg Dollar Spot Index climbed 0.2 percent, the biggest increase in two weeks.
– The euro dipped 0.4 percent to $1.1849.
– The British pound climbed 0.4 percent to $1.3528, the strongest in more than 10 weeks.
– The Japanese yen sank 0.7 percent to 112.94 per dollar, the weakest in more than two weeks on the largest decrease in more than six weeks.

Bonds

– The yield on 10-year Treasuries climbed three basis points to 2.40 percent.
– Germany’s 10-year yield rose three basis points to 0.33 percent.
– Britain’s 10-year yield increased four basis points to 1.278 percent.

Commodities

– West Texas Intermediate crude fell 1.2 percent to $57.66 a barrel, the largest fall in a week.
– Gold fell 0.6 percent to $1,272.75 an ounce, the weakest in a month.

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