Inventories increase with the stable dollar; treasury bills plunge

Stocks gained as the dollar was little changed on Monday as investors monitored the impact of price pressures on monetary policy and the pace of the economic recovery. Yields on treasury bills have increased.

The S&P 500 rose 0.2% and the Nasdaq 100 was flat after all major US stock indices hit record highs on Friday and the S&P 500 recorded its fifth consecutive weekly rally. The European Stoxx 600 index also rose on Monday, with energy companies up and retailers down.

Markets will be watching closely for a measure of U.S. consumer prices on Wednesday after gains in U.S. payrolls last week also showed an increase in average hourly earnings. According to Bloomberg Intelligence, the reading is expected to show the fastest-paced price pressures in three decades amid supply chain bottlenecks and rising energy.

“Fear of inflation and headwinds in the supply chain have been replaced by fear of missing the record rally,” said Craig Johnson, chief market technician for Piper Sandler, in a note. “Strong demand and economic momentum continue to drive earnings growth. Concerns over the coronavirus have also dissipated amid vaccine developments and widespread vaccination rates. ”

Shares of Tesla Inc. fell after Elon Musk’s Twitter followers voted to sell 10% of his stake in a poll organized by the head of the electric car. Airline inventories have risen as the United States eases travel restrictions on fully vaccinated foreigners. And shares of U.S. infrastructure-exposed companies rose after the House of Representatives passed the largest U.S. infrastructure package in decades on Friday.

In Europe, Henkel and H&M shares fell amid concerns over inflation-linked earnings, while Siemens Gamesa surged after being named the preferred supplier to Norfolk’s offshore wind projects in the UK. Richemont hit a record after a report that activist investor Dan Loeb’s Third Point LLC took a stake in the Swiss luxury goods company.

The inflation debate continues to cloud markets that had taken some comfort from a strong earnings season despite higher inflation and supply chain grunts. The CPI numbers for October and November “are very important considerations about where the Fed will go,” Mahjabeen Zaman, senior investment specialist at Citigroup, told Bloomberg Radio. “There is an upside risk in these two CPI digits and, therefore, there is actually a risk that the Fed will actually step up the pace of asset purchases.”

Meanwhile, oil rose as traders weighed the odds of a release of crude from the US Strategic Oil Reserve after OPEC + resisted a call from President Joe Biden to increase supplies faster. European gas and electricity prices have also jumped, a sign that Russia will not deliver the increase in supplies promised by President Vladimir Putin.

In China, the Communist Party is meeting for the first time in over a year this week. The rally is expected to lay the groundwork for extending the term of President Xi Jinping, who rocked the markets with his “common prosperity” campaign to redistribute the country’s wealth.

The country posted a record monthly trade surplus in October as exports surged, underscoring support for the Chinese economy which has slowed sharply in recent months.

To watch this week:

  • Communist Party of China Central Decision-Making Committee meets until Thursday
  • Federal Reserve Bank of San Francisco President Mary Daly speaks on Tuesday
  • Global financing of China, money supply and new loans in yuan on Tuesday
  • China PPI Wednesday
  • Wholesale stocks in the United States, CPI, first jobless claims on Wednesday
  • The marked American bond is closed on Veterans Day on Thursday
  • China hosts its annual Singles Day, the world’s largest shopping festival, when e-commerce giants like Alibaba and JD.com Inc. lure shoppers with bargains on Thursday

Some of the main movements in the markets:

Actions

  • The S&P 500 rose 0.2% at 9:30 a.m. New York time
  • The Nasdaq 100 has changed little
  • The Dow Jones Industrial Average rose 0.5%
  • The Stoxx Europe 600 increased by 0.2%
  • MSCI World index rose 0.2%

Currencies

  • The Bloomberg Dollar Spot Index changed little
  • The euro was little changed at US $ 1.1575
  • The British pound rose 0.3% to US $ 1.3545
  • The Japanese yen rose 0.2% to 113.15 per dollar

Obligations

  • The yield on 10-year treasury bills rose two basis points to 1.47%
  • German 10-year rate rose one basis point to -0.27%
  • The UK 10-year yield was little changed at 0.85%

Merchandise

  • West Texas Intermediate crude rose 0.2% to US $ 81.44 a barrel
  • Gold futures rose 0.5% to US $ 1,825.10 an ounce

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