Wall Street stocks rose on Monday as traders reacted to the news that Joe Biden had nominated Jay Powell as chair of the Federal Reserve for a second term, with Lael Brainard selected as nominee for vice-chair.
The US’s blue-chip S&P 500 equity index was up 0.4 per cent in early afternoon New York dealings, hitting a record high on the strength of financials and energy stocks. By contrast, however, after rising at the open, the tech-heavy Nasdaq Composite index dipped 0.6 per cent.
In government debt markets, the yield on the two-year Treasury note, which is sensitive to interest rate expectations, rose 0.07 percentage points to 0.578 per cent. The yield on the benchmark 10-year Treasury note also rose around 0.07 percentage points to 1.601 per cent. Bond yields move inversely to their prices.
Anthony Collard, head of investments for the UK and Ireland at JPMorgan Private Bank, said the prospect of a second term for Powell was “a positive, on balance”. “His navigation of the crisis [while] maintaining growth proves to us he has done a commendable job,” said Collard.
Equity markets were subdued across the Atlantic. European stocks had edged up during their afternoon session but later fell. Several countries in the bloc were last week forced to reimpose pandemic restrictions.
Europe’s Stoxx 600 share index closed 0.1 per cent lower on Monday, having fallen 0.3 per cent during the previous trading day.
Protests broke out in Austria, Italy and Belgium among other European countries over the weekend, after governments stepped up virus restrictions in response to higher numbers of infections.
London’s FTSE 100 share index closed 0.4 per cent higher.
Elsewhere, Asian stock markets were mixed. Hong Kong’s Hang Seng index fell 0.4 per cent while China’s CSI 300 index rose 0.5 per cent. Emerging market equities more broadly were down on Monday following selling pressure last week as investors increasingly shifted their attention towards developed economies where interest rates were expected to rise over the coming year.
A broad FTSE barometer of EM stocks dipped 0.9 per cent in US dollar terms, having fallen 1.4 per cent over the course of last week.
In currencies, the dollar index — measuring the greenback against six other currencies — was up 0.4 per cent. The euro was down around 0.3 per cent against the US currency at around $1.12, its lowest level since summer last year as traders bet the bloc’s central bank would stick to ultra-low borrowing costs even as US and UK policymakers were expected to raise interest rates.
The Turkish lira hit roughly TL11.4 to the dollar on Monday, its weakest ever level. Last week the country’s central bank cut interest rates by 1 percentage point to 15 per cent. The currency has fallen more than 30 per cent this year as interest rates have been slashed from 19 per cent at the start of September, against a backdrop of high inflation.
Brent crude, the oil benchmark, rose 0.5 per cent to $79.27 a barrel.
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