By Riva Gold
Rising commodity prices helped lift stock markets on Monday, while the dollar was on track for its first loss in 11 sessions as a postelection rally faded.
The Stoxx Europe 600 was up 0.2% in afternoon trade, following gains in Asia. Futures pointed to a 0.3% opening gain for the S&P 500, inching closer to its all-time high.
A steep ascent in oil and metals prices boosted shares of energy and mining companies, driving most of the day's gains in the U.S., Europe and Asia.
Brent crude oil was up 2.2% at $47.90 a barrel after Iraq's oil minister said Sunday the country would offer new proposals at next week's meeting of the Organization of the Petroleum Exporting Countries where officials are expected to discuss a supply cut.
Metals prices also rose, buffeted by a 0.4% retreat in the dollar. Gold was up 0.6% at $1,216 an ounce, while copper futures in London were up 2.4% at $5,566 a metric ton following Chinese President Xi Jinping's statement over the weekend that his government would support a Free Trade Area of the Asia Pacific. Many investors expect this to mean increased imports by China, the world's largest metal consumer.
Shares of energy companies Murphy Oil Corp. and Chesapeake Energy Corp. and mining company Freeport-McMoRan Inc. were among the best performers in U.S. premarket trading.
Europe's basic resources sector advanced 2.1%, leading markets higher, even as the health-care sector sold off. Some companies were catching up with falls in their Wall Street counterparts last week, when U.S.-listed pharmaceutical companies pulled back from a postelection rally, which had been driven by hopes for less regulation of drug pricing.
In government bond markets, the yield on the 10-year U.S. Treasury note was little changed at 2.326% from 2.337% on Friday. The 10-year note had posted its steepest two-week yield gain since 2001.
"Our bond guys said the implementation of Trump's platform will result in stronger economic growth, stronger inflation, and the Fed will tighten rates," said Phil Orlando, chief equity market strategist at Federated Investors.
"When we saw that, we immediately increased our equity allocation and took it out of Treasurys," he said, favoring economically sensitive U.S. stocks such as financials and industrials instead.
U.S. stocks have outperformed most of their global counterparts since the election, attracting a surge of new money. ETF fund flows through last week "saw a spectacular flight toward U.S. equities and away from everything else," according to J.P. Morgan.
In the week after Mr. Trump's victory, investors pulled more cash out of U.S. fixed-income funds than at any time over the last three years, according to EPFR Global.
German bond yields were unmoved at 0.278% on Monday, while the yield on 10-year Japanese bonds hovered around 0.028%.
Japan's economy beat economists' expectations in the three months through September, data showed Monday. The Nikkei Stock Average added 0.8% to reach its highest close since January.
Shanghai stocks also advanced modestly to their highest close since January, even as the Chinese yuan was fixed lower for a 12th straight session, hit by a recent appreciation of the dollar.
Currency markets have tracked the bond market closely since the election, with the dollar mostly rising alongside a decline in the price of the 10-year Treasury note.
"It's all about yield,"said Simon Derrick, chief currency strategist at BNY Mellon.
The WSJ Dollar Index cooled on Monday from its longest winning streak since 2009, with the dollar last down 0.3% against the yen and 0.4% against the British pound.
The dollar was also down 0.4% against the euro after advancing against the common currency for a record 10 consecutive sessions.
The euro's decline has coincided with the divergent monetary policy expectations from the Federal Reserve and European Central Bank. ECB President Mario Draghi will present the bank's annual report to the European parliament later Monday.
Local politics have also started to take a toll, strategists said. With the euro, "For the first time in quite a while, people are focusing on something other than pure-yield," Mr. Derrick said, adding "there's been a realization that political uncertainty is perhaps greater."
Italian 10-year bond yields rose to as high as 2.111% from 2.017% on Friday, ahead of a coming referendum on constitutional reform. They later pulled back to 2.004%.
Investors in Europe were also watching the weekend's political developments in France and Germany. Nicolas Sarkozy's campaign to reclaim the French presidency ended abruptly after a surge of support for his former prime minister, leaving François Fillon and Bordeaux Mayor Alain Juppé set to advance to a runoff next Sunday.
German Chancellor Angela Merkel also said Sunday she would run for a fourth term next year, ending months of speculation.
Biman Mukherji, Christopher Whittall and
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(END) Dow Jones Newswires
November 21, 2016 08:54 ET (13:54 GMT)
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