-
Greenback weakens following Fed’s gradual-tightening signal
-
U.S. equity futures rise; Treasuries gain; gold advances
Stocks in Europe followed Asian peers lower as investors began to switch their attention away from the Federal Reserve and back to earnings and the outlook for global trade. The dollar gave back some of its recent gains.
European shares retreated following Wednesday’s rally, with telecom and insurance companies leading the decline and most industry groups in the red. In Asia, Hong Kong stocks underperformed just as Chinese smartphone maker Xiaomi Corp. filed for what’s expected to be the world’s biggest IPO since 2014. U.S. futures were more upbeat after the main gauges slid a day earlier. The yield on 10-year Treasuries fell and the greenback pulled back from its highest since January. The euro climbed, even as European inflation unexpectedly weakened in April.
Thursday sees the start of trade talks between the U.S. and China, with both sides dialing back expectations. Beijing won’t agree to preconditions that include abandoning its advanced manufacturing program and agreeing to cut the trade gap by a fixed amount, a Chinese official said. American delegates said earlier that a breakthrough is unlikely, and they might leave early if unsatisfied.
“When you think about the things that have been weighing on the market — the potential for trade war with China, Nafta breaking up, rising rates and of course the potential rolling over in growth — I think the one that is really weighing the most heavily is trade and that’s why the market tends to swing the most violently on every new piece of news,” RiverFront Investment Group Chairman Michael Jones told Bloomberg TV.
Investors are also digesting the outcome of the latest Fed gathering. The U.S. central bank kept rates on hold as expected on Wednesday, admitting inflation is near target without suggesting any need to accelerate its gradual hiking path.
Elsewhere, oil rose as traders weighed a rise in stockpiles against concern about U.S. sanctions on Iran. The pound shrugged off political turmoil and mediocre PMI data to edge higher, while Turkey’s lira slumped to a record low after worse-than-expected inflation data.
Terminal users can read more in our markets live blog.
Some key events coming up during the remainder of this week:
- The European Commission will present its spring economic forecasts, including growth, inflation, debt and deficit projections.
- Payroll gains in the U.S. probably picked up in April, with the unemployment rate forecast to drop to 4 percent, according to surveys of economists before the data reports due Friday.
- Earnings season continues, with Alibaba and HSBC Holdings Plc on Friday.
- Reserve Bank of Australia releases its quarterly update of growth and inflation forecasts on Friday.
- Berkshire Hathaway holds its annual shareholders meeting in Omaha, Nebraska on Saturday.
And these are the main moves in markets:
Stocks
- The Stoxx Europe 600 Index declined 0.2 percent as of 10:34 a.m. London time, the largest drop in more than a week.
- Futures on the S&P 500 Index rose 0.2 percent, the biggest advance in a week.
- The MSCI All-Country World Index climbed less than 0.05 percent.
- The U.K.’s FTSE 100 Index increased less than 0.05 percent, reaching the highest in more than three months on its sixth consecutive advance.
- Germany’s DAX Index sank 0.2 percent, the first retreat in more than a week.
- The MSCI Emerging Market Index decreased 0.6 percent to the lowest in a week.
- The MSCI Asia Pacific Index declined 0.1 percent to the lowest in a week.
Currencies
- The Bloomberg Dollar Spot Index sank 0.4 percent, the biggest dip in six weeks.
- The euro jumped 0.4 percent to $1.1996, the largest climb in more than two weeks.
- The British pound climbed 0.1 percent to $1.3593, the first advance in more than a week.
- The Japanese yen jumped 0.3 percent to 109.51 per dollar, the largest climb in more than three weeks.
Bonds
- The yield on 10-year Treasuries decreased two basis points to 2.95 percent, the lowest in two weeks.
- Germany’s 10-year yield dipped two basis points to 0.56 percent.
- Britain’s 10-year yield declined three basis points to 1.457 percent.
Commodities
- West Texas Intermediate crude climbed 0.3 percent to $68.13 a barrel.
- Copper jumped 1.6 percent to $3.12 a pound, the highest in a week on the biggest jump in more than two weeks.
- Gold jumped 0.6 percent to $1,312.84 an ounce, the largest climb in almost three weeks.
By Samuel Potter – May 3, 2018, 7:40 PM GMT+10
— With assistance by Andreea Papuc, and Adam Haigh
Source: Bloomberg