Stocks Advance With U.S. Futures; Dollar Declines: Markets Wrap

(Bloomberg) — Stocks rose with U.S equity futures on Tuesday as further moves to ease coronavirus lockdowns in major economies helped offset concern of escalating geopolitical tensions. The dollar slipped for a second session.

The Stoxx Europe 600 Index jumped at the open, with travel stocks surging on reports that Germany plans to lift travel warnings for 31 European countries. The U.K. also announced steps toward getting back to business, sending the pound up by the most in a week. Futures on the three main U.S. equity benchmarks were up on Friday’s close. Japan led the equity advance in Asia as the world’s third-largest economy reopened, and shares rose in Hong Kong, which showed signs of stabilizing after weekend unrest.

Treasuries slid after the three-day U.S. weekend, alongside Germany’s government debt. WTI crude oil advanced past $34 a barrel in New York on hopes the market may rebalance after historic output cuts.

Investors are coming out of the holiday weekend in a risk-on mood, even as tensions between Washington and Beijing continue to flare. China condemned the U.S. for adding 33 Chinese entities to a trade blacklist, but without announcing any retaliatory steps. Meanwhile, Beijing sought to reassure Hong Kong that its judiciary would remain independent under a new national security law.

Cutting against the tensions are mounting signs that coronavirus infection rates are moderating. The Japanese government ended its nationwide state of emergency Monday, while Germany recorded a decline in the number of new virus cases. Signs that more euro area stimulus is on the way is also helping support the appetite for risk.

Recovery dynamics and potential drug developments are among “the key reasons to be positive,” said Chris Iggo, chief investment officer of core investments at AXA Investment Managers. “That does not mean we should ignore the risk of second waves, prolonged weak growth and geopolitical issues.”

Here are some key events coming up:

Earnings continue with companies including British Land, Royal Bank of Canada and HP Inc.Thursday brings the U.S. jobless claims reading for the week ended May 23.Federal Reserve Chairman Jerome Powell participates in a virtual discussion on Friday.

These are the main moves in markets:

Stocks

Futures on the S&P 500 Index climbed 1.9% as of 9:27 a.m. London time.The Stoxx Europe 600 Index climbed 1.1%.The MSCI Asia Pacific Index surged 1.9%.The MSCI Emerging Market Index rose 1.3%.

Currencies

The Bloomberg Dollar Spot Index fell 0.4%.The euro gained 0.4% to $1.0941.The British pound increased 0.6% to $1.2268.The onshore yuan was little changed at 7.137 per dollar.The Japanese yen weakened 0.1% to 107.80 per dollar.

Bonds

The yield on 10-year Treasuries climbed three basis points to 0.69%.The yield on two-year Treasuries climbed one basis point to 0.18%.Germany’s 10-year yield climbed five basis points to -0.44%.Britain’s 10-year yield climbed one basis point to 0.182%.Japan’s 10-year yield rose one basis point to 0.008%.

Commodities

West Texas Intermediate crude gained 2.7% to $34.16 a barrel.Brent crude increased 1.7% to $36.12 a barrel.Gold weakened 0.3% to $1,727.27 an ounce.

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