Wall St steady as oil prices lift

The ASX is set to dip as US stocks finished flat, with investors eyeing central bank meetings in the US and Japan.

Investors are focusing on rising oil prices and looming central bank meetings in the US and Japan. Picture: AP Photo/Mark Lennihan.

US stock indexes swung between slight gains and losses overnight, as shares of banks and energy companies climbed and telecommunications stocks fell.

Across the Atlantic, European markets closed stronger after a rise in oil prices.

But the Australian market is set for a slightly lower open, with ASX futures down six points at 6.30am (AEST).

US government bonds were little changed Monday and the dollar weakened ahead of this week’s meetings of the Federal Reserve and the Bank of Japan. Recent concerns that global central banks may have exhausted the limits of monetary policy roused markets from their summer calm earlier this month. The S&P 500 rose 0.5 per cent last week in choppy trading.

Major US indexes pared early gains. The Dow Jones Industrial Average was broadly steady at 18120. The S&P 500 was flat while the Nasdaq Composite slipped 0.2 per cent.

“You tend to see the market go nowhere before the Fed meeting,” said Michael Antonelli, equity sales trader at Robert W. Baird.

Telecom stocks in the S&P 500 fell 0.6 per cent as Verizon Communications lost 1.2 per cent.

Energy companies and banks, two of last week’s laggards, were among the best performers Monday.

Shares of mining and oil-and-gas companies moved higher as US crude oil rose 0.6 per cent to $US43.30 a barrel on news that military conflicts in Libya had affected the country’s oil exports. Gains in energy shares helped the Stoxx Europe 600 climb 1 per cent.

The Organization of the Petroleum Exporting Countries had this weekend damped expectations for an agreement to limit crude-oil output, with Mohammed Barkindo, the secretary-general of the cartel, saying late Saturday that no decision would be made at informal talks among its members in Algeria next week.

US crude prices fell more than 6 per cent last week, and energy shares in the S&P 500 lost 2.9 per cent -- their biggest weekly fall since May. The sector rose 0.4 per cent Monday.

The KBW Nasdaq Bank index of large US commercial lenders, down 1.6 per cent last week, gained 0.4 per cent. Wells Fargo climbed 1.5 per cent after falling almost 7 per cent last week.

The WSJ Dollar Index pulled back 0.3 per cent following Friday’s ascent. The dollar was recently down 0.4 per cent against the yen at Yen101.812. The British pound rose 0.3 per cent against the dollar, however, to $US1.3037, following its steepest loss since early July.

Long-dated government bond yields were steady Monday, with the 10-year US Treasury note recently at 1.694 per cent, according to Tradeweb, compared with 1.701 per cent last week. Yields move inversely to prices.

Few expect the Fed to raise rates in September, but investors will watch the bank’s press conference and forecasts carefully for hints at what might happen at its meeting in December. Federal funds futures, used to place bets on central-bank policy, showed Monday that investors and traders see a 12 per cent chance of an interest-rate increase this week, according to CME Group.

Investors are expecting more from the Bank of Japan. Ec onomists remain split on whether the Japanese central bank will expand its aggressive stimulus measures, including a possible further cut to its already negative interest rates. The outcome of its assessment of its policies and programs will also be closely scrutinized.

The proportion of developed-market sovereign bonds trading in negative-yielding territory, meanwhile, has dropped to 34 per cent from 40 per cent at the end of June, following a recent selloff, according to Joakim Tiberg, a strategist at UBS. Still, Japanese and eurozone investors alone have absorbed the equivalent of nearly all US Treasury net supply in the first quarter of 2016, he said, tying moves by Japan and Europe’s central banks closely to the US Treasury market.

Moves in bond markets have also driven stocks recently.

“If you want to know where stocks are going, just look at the 10-year Treasury yield,” said Julian Howard, investment director at GAM. Historically low returns on the 10-year Treasury yield earlier this year forced people to buy “bond refugees” such as steady dividend-paying stocks, he said, leaving those sectors vulnerable to any uptick in yields.

In Asia, the Shanghai Composite Index rose 0.8 per cent and Hong Kong’s Hang Seng added 0.9 per cent. Australian shares were little changed after technical glitches delayed the opening of the market, while markets in Japan were closed for a holiday.

Dow Jones