Oil jumps with commodity currencies on output deal: Markets wrap

Crude rallied on the prospect a deal to cut global supply will be extended, leading a broader advance across commodities and spurring the currencies of major exporters. European stocks also felt the benefit, with miners and energy shares gaining.

West Texas Intermediate jumped to the highest level in more than two weeks after the Saudi Arabian and Russian energy ministers said they are in favor of extending a production-cut deal for another nine months — longer than expected. The Australian and Canadian dollars, South African rand and Mexican peso were among the best performing major currencies. European stocks struggled for direction after three weeks of advances, though energy and basic resources companies increased.

The gains will offer some respite after what’s been a miserable few weeks for many commodities, amid U.S. President Donald Trump’s struggle to get his infrastructure plan underway and tightening credit in China. Meanwhile, investors are sifting various macro events in a bid to gauge the strength of the global economy. President Xi Jinping laid out a sweeping framework for Chinese-style globalization before data showed the country’s factory output and investment slowed in April. Numbers on American retail sales and inflation also cast a shadow on growth.

Here’s what investors will be watching out for this week:

• Singapore exports and Malaysia CPI for April are due Wednesday, and the Australian jobs report a day later.
• In Japan, GDP for the first quarter will be the focus on Thursday, with growth expected to have accelerated. The Philippines will also publish first-quarter GDP figures. Bank Indonesia will meet, and is expected to keep rates on hold.
• The most important U.S. data point will be industrial production on Tuesday, which will provide useful insight into how the factory sector is performing, particularly now that auto sales appear to have peaked for the cycle.
• A squeeze on U.K. consumers may be evident Tuesday, when inflation figures may show a further surge to 2.6% in April. Wednesday’s labor report may reveal pay rose 2.1%, down from 2.2%.

And here are the main movers:

Asia

• China shares trading in Hong Kong rallied to the highest level since March, as President Xi Jinping’s plans for an international infrastructure program overshadowed data showing slower growth in factory output and investment.
• Tokyo shares almost erased earlier losses as the yen weakened and investors assessed a wave of corporate earnings.

Stocks

• The Stoxx Europe 600 was little changed at 10 a.m. in London, after touching the highest level since August 2015 last week.
• Futures on the S&P 500 Index rose 0.1 percent after the underlying gauge ended last week down 0.4 percent, its first weekly loss since mid-April.

Commodities

• WTI jumped 2.5 percent to $49.06 a barrel, after climbing 3.5 percent last week.
• Gold rose 0.1 percent to $1,230.20 an ounce, extending gains to a third day.
• Copper increased 0.8 percent while aluminum rose 0.7 percent. Zinc added 0.7 percent after a three-day slide.

Currencies

• The Bloomberg Dollar Spot Index slipped 0.2 percent after falling 0.4 percent Friday. The yen fell 0.2 percent, and the euro added 0.1 percent to $1.0945.
• The Australian dollar and Mexican peso each rose 0.5 percent and the Canadian dollar climbed 0.4 percent.

Bonds

• The yield on 10-year Treasury notes was up one basis point to 2.33 percent, after dropping six basis points Friday when the weaker-than-expected CPI report buoyed bond prices.
• Benchmark yields in France and Germany rose two basis points.

Courtesy Bloomberg