Wall Street wavered, U.S. Treasury yields rose and the Japanese yen hit a 34-year trough on Monday as solid data and a calmer Middle East after Iran’s weekend attacks on Israel helped revive investor risk appetite.
The three major U.S. stock indexes pared initial gains and the Nasdaq turned slightly negative after Friday’s steep sell-off, while the yen fell to its lowest level since 1990, reviving intervention fears.
U.S. retail sales data for March blew past analyst expectations, the latest evidence in the case for the resilience of the American consumer.
“The retail sales number was a good bit better than expected and the consumer’s showing signs of being strong,” said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta.
“You’re seeing a back-up in yields, which is probably being driven by the continuing strength of the consumer and reverberations from the inflation report last week,” Martin added.
On the geopolitical front, Iran’s missile and drone attack against Israel over the weekend caused minimal damage, and calls for restraint regarding Israel’s response appeared to be calming helping tensions in the region.
“Iran’s attack was tit for that, but it didn’t work and now it’s over,” Thomas said. “That puts markets on a better footing; you see that in oil, and the volatility index is off.”
“There’s willingness to take risks that’s being reflected in the stocks.”
The Dow Jones Industrial Average rose 106.19 points, or 0.28%, to 38,089.43, the S&P 500 gained 9.88 points, or 0.19%, to 5,133.29 and the Nasdaq Composite dropped 3.13 points, or 0.02%, to 16,171.97.
European shares gained ground as tensions in the Middle East abated, boosted by surging shares in Temenos after a committee formed by the software company called damaging claims by Hindenburg Research, who shorted the stock, “inaccurate and misleading.”
The pan-European STOXX 600 index rose 0.20% and MSCI’s gauge of stocks across the globe shed 0.07%.
Emerging market stocks lost 1.03%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.02% lower, while Japan’s Nikkei lost 0.74%.
Yields for 10-year U.S. Treasuries rose, hitting their highest level since November in the wake of the Retail Sales report.
Benchmark 10-year notes last fell 33/32 in price to yield 4.6343%, from 4.499% late on Friday.
The 30-year bond last fell 63/32 in price to yield 4.7323%, from 4.603% late on Friday.
The dollar edged higher against a basket of world currencies, building on last week’s five-month high as the yen dipped to a 34-year trough.
The yen move helped revive anticipation of the possibility of intervention on the part of Japanese authorities.
The dollar index rose 0.16%, with the euro down 0.15% to $1.0626.
The Japanese yen weakened 0.67% versus the greenback at 154.34 per dollar, while Sterling was last trading at $1.2452, up 0.02% on the day.
Crude oil prices dipped as the risk premium eased in the wake of the Iranian attack.
U.S. crude fell 1.03% to $84.78 per barrel and Brent was last at $89.79, down 0.73% on the day.
Gold edged higher, building on its all-time high reached in the previous session.
Spot gold added 0.3% to $2,349.38 an ounce.