Oil eases; gold locked below $1,300 as mkt braces for Fed meeting
NEW YORK, June 12, (Agencies): World stock markets were little changed on Tuesday while the US dollar fell slightly against an index of major currencies, as investors brushed aside a long-awaited US-North Korea summit aimed at denuclearizing the Korean peninsula.
US President Donald Trump and North Korean leader Kim Jong Un met in Singapore, pledging to work toward complete denuclearization, while Washington committed to providing security guarantees for its old enemy.
The MSCI all-country world index, which tracks shares in 47 countries, gained 0.07 percent on the day.
The dollar index fell 0.04 percent, steadied in part by data on Tuesday showing US consumer prices rose in May amid a slowdown in the increase of gasoline costs.
The euro was up 0.06 percent to $1.1789.
Investors had mixed reactions to the North Korea summit, which ended with the signing of a joint statement that gave few details on how the goals set by both sides would be achieved.
Buyers of equities and government bonds seemed more interested in other matters. Along with the positive US inflation data, investors were focused on the kick-off of a two-day US Federal Reserve meeting, at which the Fed is expected to raise interest rates, as well as meetings later this week by the European Central Bank and the Bank of Japan.
Futures contracts indicate a 96 percent probability the fed funds rate will be raised a quarter of a percentage point on Wednesday, according to CME Group.
Benchmark 10-year US Treasury notes last fell 3/32 in price to yield 2.9663 percent, from 2.957 percent late on Monday.
The 30-year bond last fell 4/32 in price to yield 3.1032 percent, from 3.097 percent Monday.
Wall Street’s main equity indexes were mixed but steady, with the Dow Jones Industrial Average falling 8.78 points, or 0.03 percent, to 25,313.53, the S&P 500 gaining 3.07 points, or 0.11 percent, to 2,785.07 and the Nasdaq Composite adding 28.74 points, or 0.38 percent, to 7,688.66.
Oil was mixed after falling earlier in the day. Volatility subsided to its lowest in three weeks, as investors prepared for a key meeting of the OPEC producer group next week.
US crude rose 0.53 percent to $66.45 per barrel and Brent was last at $76.41, down 0.07 percent.
In Asian equity markets, trading was volatile with Japan’s Nikkei paring early gains to close 0.3 percent higher after earlier rising as much as 0.9 percent.
US stocks edged higher on Tuesday, with help from Twitter and media stocks, as investors looked past a historic US-North Korea summit and focused on the Federal Reserve’s policy meeting.
President Donald Trump and North Korean leader Kim Jong Un pledged to work towards complete denuclearization of the Korean peninsula, but their joint statement gave few details on how the goal would be achieved.
While defense stocks such as Raytheon, Lockheed Martin and Northrop Grumman took a hit, the broader markets saw little impact.
“Equities are really looking past the trade and geopolitical issues, and the focus is more on fundamentals,” said Terry Sandven, chief equity strategist, US Bank Wealth Management in Minneapolis.
At 13:06 ET, the Dow Jones Industrial Average was up 4.86 points, or 0.02 percent, at 25,327.17 and the S&P 500 was up 5.74 points, or 0.21 percent, at 2,787.74.
The Nasdaq Composite was up 45.33 points, or 0.59 percent, at 7,705.26, after hitting an intraday record high.
A court ruling that would decide the fate of AT&T’s Inc $85 billion offer for Time Warner is awaited after the closing bell.
Charter Communications jumped 3.1 percent, leading gains on the S&P media index, which was up 0.7 percent.
Tesla rose 6.8 percent after Keybanc raised its estimates for Model 3 deliveries for the second quarter and the full year.
The Fed is widely expected to raise interest rates for the second time this year, when it concludes its policy meeting on Wednesday.
Losses in miners and oil majors sent Britain’s top share index into the red on Tuesday, while housebuilding stocks tumbled after weak results from Crest Nicholson piled extra pressure on a sector already hit by a run of poor economic data.
A summit between US President Donald Trump and North Korea’s Kim Jong Un had limited impact on UK and European stock markets. The FTSE 100 fell 0.4 percent, while the STOXX 600 edged down 0.1 percent.
With a crucial vote on Brexit getting underway in the British parliament, a volatile sterling currency helped rein back the FTSE’s gains.
Miners Anglo American and Antofagasta were among the top fallers, down 3.2 and 2.3 percent as a strong dollar weighed on copper prices.
Oil majors Royal Dutch Shell and BP fell 1.4 percent, tracking a decline in Europe’s oil & gas index as crude prices flagged, and traders said investors were pocketing profits after a strong run in the sector.
While commodities weighed on the FTSE 100, the biggest moves were in the mid- and small-cap markets.
Crest Nicholson shares tumbled 4.2 percent, leading the housebuilding sector down. The southern England-focussed housebuilder said its margins had been hit by higher costs and flat house prices, and was moving out of central London.
Barratt Development, Berkeley, Persimmon and Taylor Wimpey all fell 2.1 to 3.1 percent, bottom of the FTSE 100, while mid-caps Bellway and Redrow fell 3.6 and 4.2 percent.
Also in disruptive retail, online fashion brand Boohoo fell percent despite reporting strong results with revenue growing 53 percent in the three months to May 31.
The stock tumbled 5 percent at the open but ended the day down just 1 percent.
Major markets in Asia and Europe rose Tuesday after Donald Trump and Kim Jong Un held a historic summit, while investors look ahead to key policy meetings at the Federal Reserve and European Central Bank this week.
Trump said he had formed a “special bond” with the North Korean leader, who reaffirmed his commitment to “complete denuclearisation of Korean Peninsula” in a joint agreement signed by the two.
While the meeting was not expected to see any immediate results, it has provided hope for peace on the Korean peninsula.
However, investors remain concerned about a possible global trade war after the weekend’s Group of Seven summit in Canada ended with Trump withdrawing support for a joint communique and accusing host Prime Minister Justin Trudeau of being dishonest.
That came just after he had hit Canada, Mexico and the European Union with steel and aluminium tariffs, sparking threats of retaliation that some fear could escalate.
For most of the day eyes were on Singapore, where Trump and Kim became the first sitting leaders of their countries to meet.
The pair signed what Trump called a “pretty comprehensive” and “very important” document, which spoke of “new US-DPRK relations” and committed Washington to “security guarantees”.
Kim said the two Cold War foes had vowed to “leave the past behind” and promised “the world will see a major change”.
Stocks fluctuated through the day but by the end of trade Tokyo was up 0.3 percent and Shanghai closed 0.9 percent higher. Hong Kong was 0.1 percent higher.
However, Seoul dipped 0.1 percent, while the Korean won eased 0.2 percent.
Singapore was slightly lower, as were Wellington, Kuala Lumpur and Taipei.
In early trade London and Paris each rose 0.3 percent, while Frankfurt gained 0.8 percent.
“After quickly shrugging off the G7 fight club in Quebec, investors latched on to the air of optimism circulating from the Singapore summit,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
* Key figures
Tokyo — Nikkei 225: UP 0.3 percent at 22,878.35 (close)
Hong Kong — Hang Seng: UP 0.1 percent at 31,103.06 (close)
Shanghai — Composite: UP 0.9 percent at 3,079.80 (close)
Oil fell on Tuesday, reversing earlier gains, although volatility subsided to its lowest in three weeks, as investors prepared for a key meeting of the OPEC producer group next week.
The Organization of the Petroleum Exporting Countries released its monthly report on Tuesday, in which it cited the high degree of uncertainty hanging over the global oil market this year.
Brent crude futures fell 35 cents to $76.11 a barrel by 1347 GMT, while US West Texas Intermediate crude futures traded 13 cents lower at $66.23.
OPEC, together with partners including Russia, has cut oil output by 1.8 million barrels per day (bpd) since January 2017 in an effort to boost the market.
Volatility in oil prices has subsided due to caution around the group’s meetings scheduled for June 22-23, at which it will decide on future supply policy.
With US sanctions threatening to cut Iranian exports and the potential for more declines in Venezuelan production, OPEC kingpin Saudi Arabia and Russia have indicated they would be willing to raise output to make up for any supply shortfall.
Gold prices remained locked just below $1,300 an ounce on Tuesday as investors waited for clues on the pace of US interest rate rises from a Federal Reserve meeting this week.
A Fed statement and press conference expected from 1800 GMT on Wednesday could push gold out of the tight range of about $1,290 to $1,305, in which it has been trapped since mid-May.
Gold is highly sensitive to interest rates because higher rates push up bond yields, making non-yielding gold less attractive, and tend to strengthen the dollar, increasing the cost of gold for buyers using other currencies.
Investors expect the Fed to increase rates on Wednesday but will be looking for hints at future policy. A more aggressive stance on monetary tightening would hurt gold.
“We are waiting for the FOMC,” said Saxo Bank analyst Ole Hansen, referring to the Fed’s policy committee.
Gold prices have tended to fall ahead of previous rate rises but recover afterwards, he said. “We’re still erring towards the potential for a move higher here.”
For a graphic click here: https://reut.rs/2JG84BA Spot gold fell by 0.2 percent to $1,297.31 an ounce by 1328 GMT, while US gold futures for August delivery dropped 0.2 percent to $1,301.10.
US bond yields had edged higher and the dollar was flat against a basket of major currencies.
Adding to the wait-and-see mood were expectations that the European Central Bank will signal a winding down of its vast bond-buying programme at a meeting on Thursday. This would be likely to help gold by boosting the euro and weakening the dollar.
Japan’s central bank will also meet on June 14-15.
Gold did not react strongly to a pledge by the leaders of the United States and North Korea to work towards complete denuclearisation of the Korean peninsula.
The joint statement signed at the end of a summit in Singapore gave few details on how that goal would be achieved.
Gold is traditionally used as a safe place to invest during times of uncertainty, and growing tensions over Korea have added to demand.
In other precious metals, silver was down 0.2 percent at $16.85 an ounce after hitting a seven-week high of $16.95 on Monday.
Platinum rose by 0.2 percent to $905.60 and palladium dipped by 0.1 percent to $1,020.72.