Shares climb as British budget, Powell testimony top agenda
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[March 06, 2024] By
Alun John and Ankur Banerjee
LONDON/SINGAPORE (Reuters) -World shares sat just below record highs on
Wednesday and the 10-year Treasury yield rose from a one-month low as
traders awaited congressional testimony from Fed Chair Jerome Powell,
one of several potentially market-moving events in the coming days.
Also on the docket are the announcement of the British budget and U.S
job openings data, both on Wednesday, China's ongoing annual parliament
meeting, the European Central Bank meeting on Thursday, and U.S.
non-farm payrolls data on Friday.
In emerging markets, Egypt's central bank let the pound tumble to record
lows and hiked interest rates by 600 basis points at an unscheduled
meeting, marking the start of a long-awaited devaluation with markets
expecting talks between the government and the International Monetary
Fund over an augmentation of the fund's program could come to fruition
soon.
Back in developed markets, Europe's broad STOXX 600 index rose 0.3%,
trading just off Monday's all-time high, and U.S. S&P 500 futures were
up 0.3%, pointing to gains after a sell-off in U.S. large cap names
overnight.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5%,
helped by a bounceback in Hong Kong, where the benchmark was up 1.7%,
though Chinese onshore bluechips dipped.
Beijing on Tuesday, set a widely expected 5% growth target for 2024 at
its key parliament meeting that lacked major stimulus measures.
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BRITISH BUDGET
British Finance Minister Jeremy Hunt will begin delivering his budget
speech to Parliament in early afternoon in Britain, though it was not
expected to cause significant ructions in global markets - unlike the
fiscal announcement in 2022 that brought about the end of Liz Truss's
brief period as prime minister.
"The government doesn't have a lot of wiggle room, so it will likely be
quite dull for sterling in comparison with 2022 - one silver lining for
markets from the Liz Truss budget is that it has ensured future
governments will have to maintain a high degree of prudence," said Jane
Foley, head of FX strategy at Rabobank.
"Then we have Powell, but there has been so much Fedspeak in the past
weeks, which - alongside the data - has been successful in pushing back
expectations of early interest rate cuts, so I think payrolls data could
have more market impact."
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Passersby walk past an electric screen displaying a graph showing
Japan's Nikkei share average movements outside a brokerage in Tokyo,
Japan February 13, 2024. REUTERS/Issei Kato/file photo
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Markets currently expect the Fed to begin cutting rates in June. At
the start of 2024, traders had seen cuts as soon as the Fed's March
20 meeting.
"It is labor market week in the U.S. we have (job opening data)
today, and payrolls Friday. January was a bit murky and came as a
setback from the six-month trend that we’ve had, so what everyone is
going to try to understand is whether January was a fluke," said
Samy Chaar, chief economist at Lombard Odier.
U.S. DATA
Non-farm payrolls in January came in much higher than expected
suggesting growth in the world's largest economy was still strong,
potentially deterring the Fed from cutting rates.
Tuesday data showed U.S. services industry growth slowed slightly,
sending 10-year U.S. Treasury yields to one-month lows. The
benchmark yield ticked up 3 basis points on Wednesday, to 4.16%,
with Germany's 10-year yield likewise moving 3 basis points higher
to 2.35%. [US/] [EUR/GVD]
China's 10-year bond yield fell to a 22-year low on expectations
that authorities would keep monetary conditions easy.
Volatility remained low in currency markets, though the Japanese yen
yen strengthened to 149.73 per dollar, on reports that some Bank of
Japan board members think it would be appropriate to lift rates from
negative territory at the March meeting. [FRX/]
The euro last was up 0.16% at $1.08730.
In cryptocurrency, bitcoin was hovering around $66,700, having
breached a record high of $69,202 in the previous session, fuelled
by investors pouring money into U.S. spot exchange-traded crypto
products.
Spot gold wobbled and was at $2,126.3 an ounce after touching an
all-time high of $2,141.59 on Tuesday. [GOL/]
U.S. crude rose 0.88% to $78.84 per barrel and Brent was at $82.66,
up 0.74% on the day. [O/R]
(Reporting by Alun John in London and Ankur Banerjee in Singapore;
Editing by Himani Sarkar, Jamie Freed and Alex Richardson)
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