Global stock index gains while US Treasury yields fall

Global stock index gains while US Treasury yields fall

By Sinéad Carew

NEW YORK (Reuters) -MSCI’s global equities index rose on Monday as Wall Street continued to feed on momentum that took it to a new record high last week, while the U.S. dollar index held steady.

U.S. Treasury yields fell as investors took advantage of a recent decline in bond prices to enter the market ahead of economic indicators due out later this week that may give new information on the direction of interest rates.

The benchmark S&P 500 scaled a fresh record high on Monday after closing at a record on Friday and confirming it was in a bull market for the first time in two years with boosts from megacap and chip stocks.

“If anything, what we’re seeing is a carry over of the strength from the last couple of trading sessions. That’s probably starting to get money in off the sidelines,” said Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management Company.

“There could just be some fear of missing out driving this, with a lot of liquidity still to enter into equity markets. Narratives tend to follow prices in the mind of retail investors. The S&P 500 at an all-time high gives them another data point to say things are getting better faster than what we were thinking.”

At 10:57 a.m. (1557 GMT) the Dow Jones Industrial Average was up 179.15 points, or 0.47%, at 38,042.96, the gained 12.62 points, or 0.27%, to 4,852.82 and the gained 40.70 points, or 0.25%, to 15,351.67.

The STOXX 600 index rose 0.82%, while Europe’s broad FTSEurofirst 300 index climbed 15.17 points, or 0.82%. The MSCI world equity index, which tracks shares in 49 nations, gained 0.35%.

In currencies, the U.S. dollar was little changed to slightly lower against a basket of currencies on Monday ahead of central bank policy decisions in Japan and the euro zone that may determine the currency’s direction this year.

The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was barely up at 103.28.

The dollar dropped 0.19% against the yen to 147.86 . The euro was down 0.1% on the day at $1.0881, having lost 1.4% in a month.

In Treasuries, the yield on benchmark 10-year Treasury notes fell to 4.0938% compared with its U.S. close of 4.146% on Friday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.3719% compared with a U.S. close of 4.408%.

The European Central Bank (ECB) meets on Thursday and is expected to hold monetary policy steady. Central banks in Canada and Norway also meet this week and no changes to rates are expected, though Turkey is thought likely to hike again.

Oil prices rose on Monday as traders weighed the impact of wars in the Middle East and Ukraine on oil supply against economic headwinds dampening global oil demand.

U.S. crude ticked up 1.54% to $74.54 a barrel. Brent crude rose to $79.65 per barrel.

In Beijing, the central bank again skipped a rate cut in its market operations on Monday and the Bank of Japan is expected to keep policy super-easy at a meeting on Tuesday. The U.S. Federal Reserve is scheduled to meet again Jan. 30-31.

Earlier, China and Hong Kong shares slumped on Monday, as relentless foreign outflows and a surge in short selling pummelled confidence already hurt by the region’s creaking economy.

China’s bluechip CSI300 Index dropped 1.6% to its lowest closing level in nearly five years while in Hong Kong, the benchmark Hang Seng Index tumbled 2.3% to its lowest level in 14 months.

(Reporting by Sinéad Carew, Nell Mackenzie and Wayne Cole; Editing by Jane Merriman, Kirsten Donovan and Susan Fenton)