Thursday, October 22, Morning Global Market Roundup: European shares and dollar edge up, ECB keeps investors wary
LONDON | BY NIGEL STEPHENSON
Reuters
October 22, 2015
Shares edged up in Europe and the dollar made slight gains on Thursday, with investors focusing on the European Central Bank, which is expected to keep the door open to more economic stimulus after its latest policy-setting meeting.
Chinese stocks were a bright spot - solidly in positive territory and recovering from Wednesday's worst one-day fall in five weeks.
Worries that global economic growth is slowing, particularly in China, have depressed stock and commodity markets across the globe in recent months and prompted a series of downgrades to economic forecasts from the International Monetary Fund and others.
Citi's economics team, led by influential chief economist Willem Buiter, cut on Wednesday its 2016 global growth outlook to 2.8 percent - a rate Buiter has previously said represents a recession.
While the ECB is not expected to take any new policy steps on Thursday, bank president Mario Draghi may signal readiness to extend its 1 trillion euro bond-buying quantitative easing scheme if necessary.
"Watch out for hints of broader QE and whether further interest rate cuts may have been discussed," said Commerzbank rates strategist Rainer Guntermann. "Yet, the bar for a dovish surprise is high."
The pan-European FTSEurofirst 300 stocks index .FTEU3 rose less than 0.1 percent in early deals, helped by an increased full-year sales outlook from Swiss drugmaker Roche (ROG.VX). The company's shares were up 1.2 percent.
Earlier MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.3 percent. Japan's Nikkei .N225 closed down 0.6 percent.
However, China bucked the trend, rebounding from Wednesday's roughly 3 percent dive. The Shanghai Composite index .SSEC and the CSI300 .CSI300 both rose 1.5 percent.
The dollar, which has been losing ground in the past month as expectations the Federal Reserve will raise interest rates this year have waned, edged up against a basket of currencies .DXY.
The euro EUR= fell 0.2 percent to $1.1313 as investors were wary of the prospect of more ECB. The dollar was down 0.2 percent at 119.76 yen JPY=.
Euro zone government bonds reflected the wait-and-see mood before the ECB and Draghi's news conference. Benchmark German 10-year Bund yields DE10YT=TWEB were flat at 0.57 percent
RESPITE
The dollar's relative weakness brought some respite for oil prices, which hit a three-week low on Wednesday after a larger-than-expected rise in U.S. crude stocks.
Brent LCOc1, the global benchmark, was last up 21 cents at $48.06 a barrel while U.S. crude CLc1 rose 23 cents to $45.43.
"I wouldn't want to conclude there is a real bounce going on," said Ric Spooner, chief market analyst at Sydney's CMC Markets. "I'd like to see U.S. crude go beyond $46 a barrel to conclude the downtrend had finished."
Gold XAU= held near its lowest in more than a week, last trading at $1,167 an ounce, having touched $1,165.30 on Wednesday.
Shares edged up in Europe and the dollar made slight gains on Thursday, with investors focusing on the European Central Bank, which is expected to keep the door open to more economic stimulus after its latest policy-setting meeting.
Chinese stocks were a bright spot - solidly in positive territory and recovering from Wednesday's worst one-day fall in five weeks.
Worries that global economic growth is slowing, particularly in China, have depressed stock and commodity markets across the globe in recent months and prompted a series of downgrades to economic forecasts from the International Monetary Fund and others.
Citi's economics team, led by influential chief economist Willem Buiter, cut on Wednesday its 2016 global growth outlook to 2.8 percent - a rate Buiter has previously said represents a recession.
While the ECB is not expected to take any new policy steps on Thursday, bank president Mario Draghi may signal readiness to extend its 1 trillion euro bond-buying quantitative easing scheme if necessary.
"Watch out for hints of broader QE and whether further interest rate cuts may have been discussed," said Commerzbank rates strategist Rainer Guntermann. "Yet, the bar for a dovish surprise is high."
The pan-European FTSEurofirst 300 stocks index .FTEU3 rose less than 0.1 percent in early deals, helped by an increased full-year sales outlook from Swiss drugmaker Roche (ROG.VX). The company's shares were up 1.2 percent.
Earlier MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.3 percent. Japan's Nikkei .N225 closed down 0.6 percent.
However, China bucked the trend, rebounding from Wednesday's roughly 3 percent dive. The Shanghai Composite index .SSEC and the CSI300 .CSI300 both rose 1.5 percent.
The dollar, which has been losing ground in the past month as expectations the Federal Reserve will raise interest rates this year have waned, edged up against a basket of currencies .DXY.
The euro EUR= fell 0.2 percent to $1.1313 as investors were wary of the prospect of more ECB. The dollar was down 0.2 percent at 119.76 yen JPY=.
Euro zone government bonds reflected the wait-and-see mood before the ECB and Draghi's news conference. Benchmark German 10-year Bund yields DE10YT=TWEB were flat at 0.57 percent
RESPITE
The dollar's relative weakness brought some respite for oil prices, which hit a three-week low on Wednesday after a larger-than-expected rise in U.S. crude stocks.
Brent LCOc1, the global benchmark, was last up 21 cents at $48.06 a barrel while U.S. crude CLc1 rose 23 cents to $45.43.
"I wouldn't want to conclude there is a real bounce going on," said Ric Spooner, chief market analyst at Sydney's CMC Markets. "I'd like to see U.S. crude go beyond $46 a barrel to conclude the downtrend had finished."
Gold XAU= held near its lowest in more than a week, last trading at $1,167 an ounce, having touched $1,165.30 on Wednesday.
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