10.01 - Stocks take a breather, USD hits 6-weeks low
Global stocks are taking a breather at the moment after rising in recent weeks. The USD extended its losses to hit a 6-week low against other major currencies. Elsewhere, Oil prices continue to rise and hit a 3-year high level. In the U.K, efforts to close a Brexit deal on financial services are continuing. Here are al the top things to know for today’s trading in financial markets.
After yet another bullish close on Wall Street a day earlier, with the S&P 500 notching its best start to a year since 1987, U.S. futures finally pointed to a break in the rally as market participants awaited the unofficial start of fourth quarter earnings season with reports from Wells Fargo and JPMorga on Friday.
Elsewhere, European equities also showed caution as the Old World’s own reporting season got underway and buyer exhaustion seemed to hit stock floors.
Earlier, Asian shares flinched from testing their 2007 record peak as investors took profits in high-tech shares.
Oil prices jumped to three-year highs on Wednesday as faith in OPEC’s capacity to curb production and signs of healthy global demand buoyed bullish sentiment in black gold.
However, observers will continue to keep an eye on U.S. shale production amid concerns that rising output stateside could derail OPEC’s efforts to rebalance global markets.
Also supporting oil prices on Wednesday, the American Petroleum Institute said late Tuesday that crude inventories fell by 11.2 million barrels in the week ending January 5, compared to expectations for a 3.9 million barrel decline.
Market participants were looking ahead to the U.S. Energy Information Administration's weekly U.S. crude oil inventories data, due later Wednesday amid expectations for a decline of 3.9 million barrels.
U.S. crude oil futures gained 0.71% to $63.41 at 11:05 GMT, while Brent oil rose 0.38% to $69.09. The U.S. benchmark was off an intraday high of $63.56, last seen in December 2014.
The dollar extended losses against the yen on Wednesday, after the Bank of Japan trimmed the size of its bond purchases in the prior session, sparking speculation that it could start to scale back its monetary stimulus later this year.
Even though most economists expect the BOJ to keep both short-term rates and the 10-year bond yield target unchanged at least until the second half of 2019, while most experts believe the Japanese central bank will not begin scaling back its stimulus until late 2018 or after, the hint of removing accommodation pushed the yen higher.
At 11:06 GMT, USD/JPY fell 1.13% to 111.38, its lowest level since November 28.
UK finance minister Philip Hammond and Brexit secretary David Davis were in Germany on Wednesday with the hopes to convince the country’s business leaders to pressure the European Union’s representatives to forge a deal to secure the future of Britain’s financial services.
The British politicians warned that an integrating approach to banking would be vital once the UK leaves the economic bloc, suggesting that the lack of a deal would leave Europe open to a repeat of the euro zone financial crisis.
In a joint article published in German news, Hammond and Davis argued that “the 2008 global financial crisis proved how fundamental financial services are to the real economy, and how easily contagion can spread from one economy to another without global and regional safeguards in place.”
They expressed their view that the UK “supports collaboration within the European banking sector, rather than forcing it to fragment”.
- by Roger Gain