Dollar Rises, Oil and Gold Advance After Venezuela: Markets Wrap

(Bloomberg) — The dollar climbed and Treasuries trimmed recent gains after US jobs data did little to strengthen the case for further Federal Reserve interest-rate cuts. Oil advanced after President Donald Trump ramped up pressure on Venezuela.

The US currency gained against all its Group-of-10 peers, strengthening the most versus the yen. Treasuries edged lower across the curve with the yield on the 10-year up one basis point at 4.16%. In the UK, the pound fell 0.7% after inflation slowed more than expected.

Brent crude jumped 1.5% as Trump ordered a blockade of tankers going into and leaving Venezuela, raising concerns about supply from the OPEC member. A rebound in Chinese stocks lifted Asian markets while US and European equity-index futures pointed to gains.

The latest US labor data signaled a cooling jobs market — but not one rapidly weakening — prompting traders to hold off on increasing bets for near-term rate cuts. Following Tuesday’s report, markets priced in a roughly 20% chance of a January reduction. Attention now turns to Thursday’s inflation numbers for clues on whether the narrative may shift in the final full trading week of the year.

“We take a glass half full, rather than a glass half empty, view of the combined part-October, full November employment report and, more importantly, we think the Fed will too,” Evercore ISI economist Krishna Guha wrote in a note. “Specifically, we do not think this was weak enough to spur another near-term rate cut.”

Meanwhile, the Trump administration threatened retaliation against the European Union in response to efforts to tax American tech companies, singling out prominent companies, including Accenture Plc, Siemens AG and Spotify Technology SA, as possible targets for new restrictions or fees.

Oil Escalation

Trump’s Venezuela oil blockade represents an escalation and follows the seizure of an oil tanker last week by US forces.

As well as lifting crude prices, the tensions helped send gold above $4,330 an ounce, leaving it close to the record $4,381 set in October. Bullion has jumped about two-thirds this year and is on track for its best annual performance since 1979.

Other precious metals were also gaining, with silver climbing to a record over $66 an ounce and Platinum hitting the highest since 2008.

The contrast between the performance of US equities and commodities in December is boosting the asset-class’s appeal, Ahmad Assiri, a strategist at Pepperstone Group Ltd., said in an e-mail.

“That divergence is increasingly influencing cross asset planning and allocation decisions, with precious metals emerging as a more and more credible alternative destination for capital and reinforcing what is now a well established momentum trade,” he said.

Elsewhere, the Indian rupee jumped 1% after the central bank stepped in to support the currency. Bitcoin slid 1% to trade around $86,700 as the token headed for the fourth annual decline in its history.

Corporate Highlights:

OpenAI is in initial discussions to raise at least $10 billion from Amazon.com Inc. and use its chips, a potential win for the online retailer’s effort to broaden its AI industry presence and compete with Nvidia Corp. Tesla Inc.’s sales in California are poised to be suspended for 30 days if it doesn’t change its marketing practices that allegedly mislead consumers about its driver-assistance technology. Warner Bros. Discovery Inc. is planning to reject Paramount Skydance Corp.’s hostile takeover bid due to concerns about financing and other terms, people familiar with the matter said. Waymo, Alphabet Inc.’s autonomous driving unit, is in discussions to raise more than $15 billion at a valuation near $100 billion, in a financing round led by its parent company. Luckin Coffee Inc. is considering making a bid for Nestle SA’s Blue Bottle Coffee to boost its brand profile and expand in the premium coffee segment. SBI Shinsei Bank Ltd. surged as much as 16% in its trading debut in Tokyo on Wednesday after raising ¥322 billion ($2.1 billion) in Japan’s second-biggest initial public offering of the year. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 7:36 a.m. London time Nasdaq 100 futures rose 0.1% Futures on the Dow Jones Industrial Average were unchanged The MSCI Asia Pacific Index rose 0.3% The MSCI Emerging Markets Index rose 0.7% Currencies

The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.3% to $1.1711 The Japanese yen fell 0.4% to 155.40 per dollar The offshore yuan was little changed at 7.0412 per dollar The British pound fell 0.7% to $1.3332 Cryptocurrencies

Bitcoin fell 0.9% to $86,999.26 Ether was little changed at $2,949.64 Bonds

The yield on 10-year Treasuries was little changed at 4.15% Germany’s 10-year yield declined two basis points to 2.83% Britain’s 10-year yield advanced two basis points to 4.52% Commodities

Brent crude rose 1.5% to $59.81 a barrel Spot gold rose 0.5% to $4,324.15 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Jake Lloyd-Smith and Preeti Soni.

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