Thursday 10:00 GMT
Overview
Stock markets are generally firmer as investors absorb a flurry of company earnings reports. The dollar is a touch softer, pushing gold back toward recent highs, while sovereign bond markets are relatively becalmed.
What to watch
It’s a busy day for corporate results in Europe and in the US, where Coca-Cola and Viacom are among those due to present their earnings.
Data on the slate include the US weekly jobless claims.
A number of central bankers are in line to make speeches, including St Louis Federal Reserve Bank President James Bullard and Chicago Federal Reserve Bank President Charles Evans.
Hot topic
Is gold rediscovering its haven status? The precious metal is up 0.1 per cent to $1,243 an ounce, recovering from an early bout of profit-taking.
On Wednesday it touched a three-month intraday high of $1,244.7 as a number of factors offered support.
First is the US dollar. The buck, in which most commodities are denominated, tends to have an inverse correlation to bullion. Consequently the dollar’s recent stall following its post-US election bounce has been supporting the yellow metal in recent weeks.
Similarly, as the “Trumpflation trade” has faded — with investors questioning the extent to which the new US administration’s mooted policies can boost the economy — so government bond yields have pulled back.
Gold, which in effect offers no yield, tends to benefit from lower implied interest rates because this reduces the “opportunity cost” of holding the metal.
Then there is the haven angle. Traditionally seen as a bolthole in times of political stress, gold has been lifted of late by concern that President Trump’s protectionist policies may aggravate relationships with other countries.
In addition, a flurry of elections across Europe this year — notably in France — are seen raising the risk that anti-EU parties could gain ground, potentially calling into question the future of the eurozone.
Forex
The euro, however, is stable on Thursday as the US currency sheds early session strength.
The common currency is up 0.1 per cent to $1.0705 and the pound is adding 0.2 per cent to $1.2569 after UK members of parliament voted to begin the formal process of leaving the EU by approving the triggering of Article 50.
The Japanese yen remains on the back foot, but its loss of 0.2 per cent to ¥112.20 is half its initial retreat.
All this leaves the dollar index, which at the start of 2017 hit a 14-year high of 103.82, off 0.2 per cent to 100.10.
The New Zealand dollar is a notable forex casualty, falling 0.7 per cent to $0.7212 after the country’s central bank said a lower exchange rate was needed.
Equities
Stock markets are mainly firmer, but any bullish mood is subdued by Wall Street’s inability to extend its post-election rally.
US index futures suggest the S&P 500 will add 1 point to 2,295.5, when trading gets under way later in New York. The S&P has not closed outside a range of 2,258 and 2,298 all year as investors wait to see some meat on the bones of President’s Trump’s mooted policies.
The pan-European Stoxx 600 index is up 0.2 per cent as investors weigh results from the likes of Société Générale, Total, Commerzbank and Publicis.
The mood was more mixed in Asia, where Japan’s Topix lost 0.7 per cent amid a recently stronger yen, but Australia’s S&P/ASX 200 index rose 0.2 per cent, as gains by utilities offset a drop for materials stocks.
In Hong Kong, the Hang Seng index rose 0.2 per cent, while in China the Shanghai and Shenzhen Composite indices climbed 0.5 and 0.7 per cent respectively.
Fixed income
A calm tone across the broader market is matched in the sovereign bond sector, where moves are minimal.
The yield, which moves inversely to price, on 10-year US Treasuries is up 1 basis point at 2.36 per cent and the more policy-sensitive two-year note is static at 1.16 per cent.
Futures markets are pricing in a 39.1 per cent chance that the Federal Reserve will raise interest rates by 25 basis points at its meeting in May.
Benchmark 10-year German Bund yields are adding just 1bp to 0.31 per cent and the equivalent maturity French paper is 3bp softer at 0.98 per cent. The Franco/German yield spread, now 67 basis points, hit a four-year high of 78.5bp at one stage on Wednesday as investors demanded a premium from Paris on worries about the upcoming French election.
Commodities
Oil prices are on the mend after oversupply concerns prompted a dip in recent sessions.
Brent crude, the international marker, is up 0.9 per cent at $55.61 a barrel after hitting a three-week low of $54.44 on Wednesday. West Texas Intermediate, the US marker, is adding 1 per cent to $52.86 per barrel.
Copper is up 0.3 per cent to $5,885 a tonne, hovering near a two-month high, as traders await the fallout from a planned strike at the world’s biggest mine of the red metal, Chile’s Escondida.
Additional reporting by Hudson Lockett in Hong Kong
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