The Standard & Poor’s 500 Index rose with European stocks, while crude oil and bonds slipped as diplomats from Ukraine and Russia discussed a possible truce and Kurdish forces made progress against militants in Iraq.
The S&P 500 (CME:SPU500) advanced 0.4% at 9:30 a.m. in New York, while the Stoxx Europe 600 Index rose 1%. Brent crude (NYMEX:SCQ14) declined 1.6% and gold fell for a second session. Ten-year Treasury (CBOT:ZNU14) yields rose three basis points and rates on similar-maturity German and U.K. debt climbed more than five basis points. The pound gained after the Bank of England governor spoke about the interest-rate outlook.
Ukraine and Russia made some progress in “difficult” talks in Berlin, according to German Foreign Minister Frank-Walter Steinmeier, while his Russian counterpart said the meeting is yet to produce a resolution. Kurdish forces retook control of Iraq’s largest dam. U.S. inflation figures and Federal Reserve-meeting minutes are due this week.
“Every time you have a de-escalation of geopolitical risk it works favorably to the market,” Steen Jakobsen, chief investment officer at Saxo Bank A/S in Copenhagen, said by phone. “The short-term direction of the stock market at the moment is driven almost entirely by whatever news is coming out of the Ukraine, Russia situation. I see this as a temporary relief.”
Ukrainian Foreign Minister Pavlo Klimkin met his Russian counterpart Sergei Lavrov for more than five hours of talks in Berlin, as they sought to ease tension after officials in Kiev said troops had partially destroyed an armed convoy from Russia.
The S&P 500 fell as much as 3.9% from a record reached on July 24 amid growing concern over global conflicts from Ukraine to Gaza and Iraq. The benchmark index gained 1.2% last week as data showing an uneven economic recovery boosted speculation that the Federal Reserve won’t raise rates sooner than anticipated.
The central bank remains on pace to wind down its monthly bond purchases in October, while Fed Chair Janet Yellen has said officials will keep its benchmark interest rate low for a “considerable time” after that. The central bank releases minutes from its July meeting on Aug. 20.
Clothing retailer Urban Outfitters Inc. is reporting earnings today. About 76% of S&P 500 companies that have posted results this season have beaten analysts’ estimates for profit, while 65% exceeded sales projections, according to data compiled by Bloomberg.
The Stoxx 600 climbed today after rising 1.5% last week as reports showed the euro area’s recovery stalled in the second quarter, spurring speculation the European Central Bank will boost stimulus measures.
All 19 industry groups in the gauge rose today, with automakers advancing the most. United Internet AG added 3% after buying a 10.7% stake in Rocket Internet AG. Roche Holding AG increased 1% after people familiar with the matter said the drugmaker is in talks to buy the stake in Japan’s Chugai Pharmaceutical Co. that it doesn’t already own.
Neste Oil Oyj fell 1.2% after the Finnish company said production will fall at one of its refineries.
Brent dropped to $102.46 a barrel in London as West Texas Intermediate crude slipped 0.8% to $96.56 per barrel in New York, extending last week’s 0.3% drop, its fourth straight weekly loss.
Iraqi and Kurdish forces retook control of the Mosul Dam, Iraqiya television reported, citing military spokesman Qassem Ata. The U.S. widened its airstrikes in Iraq at the weekend to help secure the dam near Mosul, Iraq’s largest northern city, after it was seized by Islamist militants. Iraq is OPEC’s second-biggest oil producer.