Samsung, Tencent surge in
race to become Asia's most valuable firm
Send a link to a friend
[August 24, 2016]
By Jamie McGeever
LONDON (Reuters) - European stocks
edged toward consecutive daily gains for the first time in three
weeks on Wednesday, drawing support from a weak euro as investors
moved to price in a U.S. interest rate rise, boosting the dollar.
The earlier mood was more risk-averse, with the prospect of higher
U.S. rates in coming months amid uncertainty about the strength of
the global economy dragging Asian stocks lower and flattening the
U.S. yield curve.
The difference between 10-year and two-year U.S. Treasury yields
fell to its lowest in a month. A flattening curve is often seen as a
harbinger of low growth, inflation and rates.
But European stocks recovered initial losses, the U.S. yield curve
bounced and U.S. futures turned green to indicate a slightly higher
open on Wall Street <ESc1>. The S&P 500 <.SPX> and Nasdaq <.NDX>
came within a whisker of all-time highs on Tuesday.
Some observers said that, on a light day for data, investors' nerves
may have been soothed by signs that the anticipated economic seizure
in Britain - and beyond - from the shock vote in June to leave the
European Union had not materialized.
"Brexit? What Brexit?" asked Holger Schmieding, chief economist at
Berenberg Bank. "In the rest of the EU, the repercussions of the
Brexit vote have been rather mild."
The FTSEuroFirst index of the leading 300 European shares was up 0.5
percent at 1,358 points, having earlier fallen as much as 0.4
percent, and Germany's DAX staged a similar rebound to trade up 0.5
Britain's FTSE 100 was little changed, capped by weakness in
British mining giant Glencore after it reported a fall in underlying
profit and lowered its debt target.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.4 percent, with traders cashing in on its rise of more than
14 percent since late June.
Japan's Nikkei rose 0.6 percent, supported by a slightly weaker yen,
while MSCI's main global stock index fell 0.1 percent.
The dollar consolidated ahead of a gathering of global central
bankers later this week in Jackson Hole, Wyoming, where the focus
will be on Friday's keynote speech by Federal Reserve Chair Janet
Investors will be hoping for further clues on when the Fed will
follow up last December's rate hike with another. Futures markets
assign a roughly one-in-five chance it will be September, and 50-50
odds by the end of the year.
[to top of second column]
A worker shelters from the rain as he passes the London Stock
Exchange in the City of London at lunchtime October 1, 2008.
REUTERS/Toby Melville/File Photo
The dollar was up slightly against the yen at 100.25 yen, holding above the
psychologically important 100 level, and the euro fell 0.25 percent to $1.1274.
The dollar index of its value against a trade-weighted basket of currencies rose
to 94.67, after falling more than 1 percent last week.
"Seemingly in anticipation of a relatively hawkish message from Fed Chair Yellen
...the dollar is making modest gains," RBC Capital Markets analysts wrote in a
client note on Wednesday.
"But other markets are more circumspect about the prospect of Yellen signalling
a tougher stance on monetary policy," they added.
One is the bond market. The 2-10 U.S. yield curve flattened to 78 basis points
earlier on Wednesday, suggesting investors are lukewarm on what higher borrowing
costs will do for the U.S. and world economy.
Last month the curve traded as low as 73 basis points, the flattest since 2007.
Oil prices fell, reversing earlier gains, after the American Petroleum Institute
(API) reported on Tuesday that U.S. crude inventories rose by a surprising 4.5
million barrels last week.
Brent crude fell 1 percent to $49.47 a barrel, while U.S. West Texas
Intermediate (WTI) crude <CLc1> slipped 1.6 percent to $47.33.
(Reporting by Jamie McGeever; editing by John Stonestreet)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.