Monday, January 21, 2019
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Treasuries Gain, Ruble Drops as U.S. Stocks Erase Gains

The ruble declined and Treasuries rose after a deadly clash in Ukraine. U.S. stocks erased gains.

Ten-year Treasury yields fell three basis points to 2.69 percent as of 10:36 a.m. in New York. Gold slid to a two-week low and wheat dropped 3 percent. The ruble depreciated 0.3 percent against the dollar. Japan's currency declined versus all of its 16 major peers. The Standard & Poor's 500 Index (SPX) was little changed at 1,864.48, paring an advance that reached 0.3 percent.

Netflix Inc. and Zions Bancorporation are among S&P 500 companies reporting earnings today and the index of U.S. leading indicators increased in March by the most in four months. Ukraine warned that Russia may use the fatal shootout in the country's east as a pretext for invasion as a diplomatic accord reached last week showed little sign of taking hold. Markets in the U.K., Germany, Hong Kong and Australia were closed for the Easter Monday holiday.

"All the fundamentals still line up that stock prices can go higher," John Fox, director of research at Fenimore Asset Management in Cobleskill, New York, said in a phone interview. "The few earnings that we've had so far have been coming in pretty well."
Earnings Season

Barrick Gold Corp. dropped and Newmont Mining Corp. advanced as the two gold mining companies discuss a possible merger, people with the knowledge of the matter said. Halliburton Co. (HAL) climbed 3.5 percent after forecasting profit growth for the second quarter. Athenahealth Inc. fell 8.3 percent after reporting quarterly earnings that missed projections.

Continued gains in the labor market, improving consumer sentiment and strengthening demand are boosting consumption among households. The Conference Board's index, a gauge of the outlook for the next three to six months, rose 0.8 percent after a 0.5 percent gain in February, the New York-based group said. The median forecast of 42 economists surveyed by Bloomberg called for an advance of 0.7 percent.

More than 70 percent of the companies that have announced results this season have beaten analysts' profit estimates, data compiled by Bloomberg show. Analysts project that earnings at S&P 500 companies increased 0.7 percent in the first quarter, while revenue climbed 2.6 percent, according to the average estimate.
Emerging Markets

The MSCI Emerging Markets Index decreased 0.1 percent. Russia's Foreign Ministry blamed the Ukrainian nationalist group Pravyi Sektor for the violence which left at least three people dead over the weekend, an allegation that Pravyi Sektor denied in a statement. Viktoria Syumar, first deputy head of the National Security and Defense Council in Kiev, said on her Facebook page that Russia's accusation and statements show it's preparing to invade Ukraine.

The discord adds to skepticism about whether Ukraine, the U.S. and the European Union will be able to use an April 17 Geneva accord to encourage Russian President Vladimir Putin to ease tensions that he says he's had no role in creating.

The Shanghai Composite Index fell 1.5 percent amid speculation that new initial public offerings and sales of preferred shares by lenders will sap liquidity. India's Sensex added 0.6 percent, advancing for a second day.

Gold slid 0.6 percent to $1,286.84 an ounce. The metal has pared this year's advance as investors assessed prospects for further cuts to the Federal Reserve's stimulus program amid signs of recovery in the world's largest economy.
Safe Haven

"It is very difficult for gold to sustain the panic that makes it a good safe-haven trade," Frances Hudson, a strategist at Standard Life in Edinburgh, which oversees $294 billion of assets. "I see demand for gold remaining non-enthusiastic. Things are looking better in the U.S. and Europe. It's not that both these economies are racing ahead, but they are gradually improving."

The yen declined 0.1 percent to 102.55 per dollar. The deficit quadrupled from a year earlier to 1.45 trillion-yen ($14.1 billion), larger than a 1.08 trillion yen projection by economists, amid the weakest export growth in a year.

"Japan's trade deficit was much larger than expected, so it helped to push the yen lower," said Marito Ueda, senior managing director at currency-margin company FX Prime Corp. in Tokyo. "We're likely to shift to a dollar-strength story from a yen weakness story going forward as we start to see good data from the U.S."

To contact the reporter on this story: Joseph Ciolli in New York at This email address is being protected from spambots. You need JavaScript enabled to view it.

To contact the editors responsible for this story: Lynn Thomasson at This email address is being protected from spambots. You need JavaScript enabled to view it. Stephen Kirkland

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