Stocks Edge Higher as Futures Steady; Dollar Gains: Markets Wrap

(Bloomberg) -- A three-day rally in global stocks paused for breath on Thursday as Treasuries held overnight losses and the dollar rose.

European stocks edged higher led by energy firms amid a mixed bag of corporate results. Deutsche Bank AG reversed an earlier gain after the German lender reported its first annual profit in six years, while Unilever Plc slumped after margins missed estimates on restructuring charges. S&P 500 futures were steady after the gauge closed little changed on Wednesday following its biggest two-day rally in almost three months.

Oil continued its ascent as OPEC+ said it will keep pushing to quickly clear the surplus left behind by the pandemic. Meanwhile, benchmark 30-year Treasury yields are trading near the highest level in a year while their gap to 5-year yields -- a widely watched indicator of growth expectations -- reached the steepest in almost five years Wednesday.

Reflation bets are back on the table amid signs the economic recovery is gathering pace and the imminent passage of $1.9 trillion of pandemic aid by U.S. lawmakers. Friday’s payroll report may provide fresh impetus after the private sector added more jobs than forecast in January.

“These numbers give investors limited reason to fade rates weakness at this stage,” strategists at Mizuho International Plc including Peter Chatwell wrote in a Thursday report. The “momentum” pushing up rates could take the 10-year Treasury benchmark yield to 1.2% and the long-bond to 2% before stalling, they predicted.

These are some key events coming up:

• The Bank of England sets rates on Thursday and an Indian central bank policy decision is due Friday.
• The U.S. January payrolls report is due Friday.

These are some of the main moves in markets:

Stocks

• Futures on the S&P 500 Index climbed 0.2% as of 8:33 a.m. London time.
• The Stoxx Europe 600 Index increased 0.4%.
• The MSCI Asia Pacific Index fell 0.6%.
• The MSCI Emerging Market Index declined 0.4%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%.
• The euro fell 0.3% to $1.2002.
• The British pound declined 0.4% to $1.3586.
• The onshore yuan was little changed at 6.463 per dollar.
• The Japanese yen weakened 0.2% to 105.19 per dollar.

Bonds

• The yield on 10-year Treasuries declined less than one basis point to 1.14%.
• The yield on two-year Treasuries declined less than one basis point to 0.12%.
• Germany’s 10-year yield was unchanged at -0.46%.
• Japan’s 10-year yield rose less than one basis point to 0.061%.
• Britain’s 10-year yield jumped one basis point to 0.377%.

Commodities

• West Texas Intermediate crude gained 0.7% to $56.10 a barrel.
• Brent crude increased 0.7% to $58.84 a barrel.
• Gold weakened 0.6% to $1,823.04 an ounce.

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