Group of 20 officials say they will avoid competitive devaluation
By William L. Watts, MarketWatch
LONDON (MarketWatch) — A pledge by finance officials from the Group of 20 nations to avoid competitive currency devaluations helped lift U.S. stock-index futures Monday.
Futures on the Dow Jones Industrial Average (DJZ10 11,149, +59.00, +0.53%) rose 55 points to 11,145, while futures on the Standard & Poor’s 500-share index (SPZ10 1,190, +8.80, +0.75%) advanced 7.1 points to 1,187.80. Nasdaq 100 futures (NDZ10 2,115, +11.25, +0.54%) gained 9.75 points to 2,113.75.
“There’s a degree of hope that after the weekend’s G-20 meeting, the world’s major economies will now shy away from pursuing competitive currency devaluations and this should offer further confidence for equities across the board, although it has done little to support the dollar,” said Chris Weston, research analyst at IG Markets.
The G-20 outcome did nothing to stop the U.S. dollar’s decline, while gold and other commodities rallied alongside equities as investors’ appetite for risk increased.
Finance ministers agreed to refrain from competitive devaluation of currencies. The meeting comes ahead of a gathering of G-20 leaders next month.
“Since the statement, which was released on Saturday, the market has sold dollars and bought risky assets with relish,” said Kathleen Brooks, research director at Forex.com, in a note to clients.
“In our view, there are two reasons for the dollar sell-off: firstly, the G-20 hasn’t stopped the wheels of the Fed’s printing presses from turning, and secondly, it has calmed currency tensions for now, which makes risky assets more attractive to hold,” she said.
The meeting of G-20 finance officials produced little concrete agreement. Officials agreed to try to maintain trade balances at “sustainable levels” but were unable to reach agreement on a precise target, as had been proposed by U.S. officials.
On the corporate front Monday, RadioShack Corp. (RSH 22.80, -0.05, -0.22%) , Boyd Gaming (BYD 7.99, +0.30, +3.90%) , Cabot Oil & Gas (COG 30.88, +0.45, +1.48%) and Lorillard Inc. (LO 84.05, +0.85, +1.02%) are expected to report results ahead of the opening bell.
Earnings from Texas Instruments (TXN 28.66, +0.44, +1.56%) and Amgen (AMGN 57.55, -0.07, -0.12%) are expected after Monday’s close.
Later in the week, investors will digest results from Microsoft Corp. (MSFT 25.38, -0.04, -0.17%) , Exxon Mobil Corp. (XOM 66.34, +0.02, +0.03%) and other bellwethers.
But while earnings data remain in the spotlight for now, investors will soon turn their attention toward the U.S. mid-term congressional elections on Nov. 2, analysts said. Read Weekend Snapshot.
Concerns about prospects for corporate profit growth and nervousness ahead of the conclusion of the G-20 meeting capped gains for U.S. equities Friday, although major indexes ended with a third consecutive week of gains.
The Dow Jones Industrial Average (DJIA 11,133, -14.01, -0.13%) fell 14.01 points Friday to close at 11,132.56, but held on to a weekly gain of around 0.6%. The S&P 500 (SPX 1,183, +2.82, +0.24%) rose 2.82 points Friday to close at 1,183.08, while the Nasdaq Composite (COMP 2,479, +19.72, +0.80%) gained 19.72 points to 2,479.39.
European stocks rose on Monday, with shares of luxury-goods firms LVMH Moet Hennessy Louis Vuitton (FR:MC 118.05, +4.75, +4.19%) and Hermes International (FR:RMS 203.05, +26.85, +15.24%) rallying on deal news. Read Europe Stocks for more.
The G-20 agreement did nothing to halt the slide of the dollar, which fell to a 15-year low versus the Japanese currency (USDYEN 80.6400, -0.8000, -0.9824%) and traded at 80.60 yen in recent action, a loss of 1.1% from Friday. The euro (EURUSD 1.4035, +0.0082, +0.5876%) rose 0.6% to $1.4041.
Gold futures (GCZ10 1,344, +18.90, +1.43%) rose $19.60 in electronic trade to $1,344.70 an ounce. Crude-oil futures were up $1.08 at $82.77 a barrel.
