Wall Street hit record highs and the dollar rose to a 14-year peak last week as investors piled on bets that the anticipated fiscal boost from the incoming administration of U.S. President-elect Donald Trump would support riskier assets.
That trend looked set to continue on Monday with U.S. equities traders cautiously optimistic in a low-volume environment analysts said was typical of the last full trading week of the year.
“Although I believe that the market has run a little ahead of itself, as long as there’s no bad news, this momentum trade can record new tops,” said Hussein Sayed, chief market strategist at forex broker FXTM.
The Dow Jones industrial average rose 25.5 points, or 0.13 percent, to 19,868.91, the S&P 500 gained 3.56 points, or 0.16 percent, to 2,261.63 and the Nasdaq Composite added 23.76 points, or 0.44 percent, to 5,460.92.
Europe’s index of leading 300 shares retreated from Friday’s 11-month high and fell 0.09 percent. Shares in Italy’s Monte dei Paschi fell more than 11 percent as it made a last-ditch attempt to raise 5 billion euros by year-end and avoid a state bailout.
Germany’s DAX index edged up 0.2 percent while France’s CAC slipped 0.22 percent. Britain’s FTSE 100 edged up 0.08 percent.
MSCI’s all-country world index that tracks stock markets around the globe rose 0.2 percent.
Investors looked ahead to Yellen’s speech at 1:30 p.m. (1830 GMT) for further insight into last week’s decision by the Fed to raise U.S. overnight interest rates for the first time this year and its projection of three rate hikes in 2017.
The dollar slipped 0.2 percent, but was still near a 14-year high against a basket of currencies touched last week.
The Turkish lira and Russian rouble fell to session lows against the greenback on reports the Russian ambassador to Turkey was seriously injured in a gun attack in the Turkish capital of Ankara.
The lira was last down about 0.5 percent at 3.525 lira per dollar, while the rouble hit a session low of 62.045 rouble per dollar before retracing to 61.800, according to Reuters data.
The safe-haven Japanese yen added to gains after the report of the ambassador being shot, rising more than 1 percent against the dollar. It has bounced back strongly from last week’s losses, helped by strong Japanese export data.
U.S. Treasury yields fell further from multi-year highs after the report, furthering the day’s price moves as investors covered short positions ahead of year-end as they looked to Yellen’s speech.
The yield on 10-year U.S. Treasuries was last 2.53 percent, down nearly 7 basis points.
The Bank of Japan began a two-day policy meeting at which it is widely expected to keep rates on hold, maintaining twin targets of minus 0.10 percent interest on a part of excess reserves and the zero percent 10-year government bond yield.
Japan’s Nikkei, which has benefited from the yen’s sharp fall against the dollar, snapped its nine-day winning streak, edging down from Friday’s one-year high.
Oil prices edged lower but held around $55 per barrel, supported by delays in new Libyan oil exports and expectations of tighter supplies going into 2017.
Brent futures fell 0.7 percent to $54.82 a barrel, while U.S. West Texas Intermediate crude dipped 0.2 percent to $51.79 per barrel. – Reuters