Thursday 15:00 GMT
What you need to know
● Markets calmer after midweek wobble as traders eye US healthcare vote
● S&P 500 a touch firmer and European bourses edge ahead
● Treasury yields nudge higher
● Dollar index remains below 100 in subdued forex action
Hot topic
Markets are calmer after a wobble this week raised questions about the outlook for the “Trump trade” — the global risk-on rally that took place after Donald Trump won the US presidential election.
Concerns that Mr Trump might struggle in his efforts to replace “Obamacare” had investors fretting that he may also face difficulty pushing through his other pro-business agendas.
Wall Street recovered on Wednesday from its biggest one-day sell-off in more than five months, with the S&P 500 edging 0.2 per cent higher.
Thursday’s New York open sees the US stock barometer up a further 0.2 per cent to 2,354 as investors await the outcome of the House healthcare vote, which is scheduled to take place later on Thursday.
Analysts at RBC, the Canadian bank, said markets were viewing the healthcare vote as “a bellwether for the prospects for the Trump administration’s ability to get its tax reform proposals approved”.
In focus
Sterling is up 0.3 per cent to $1.2521 and strengthening by 0.4 per cent to £0.8613 per euro after data showed UK consumers hitting the high street with a bit more gusto.
The Office for National Statistics said that retail sales in February rose 1.4 per cent month-on-month, beating expectations for a 0.4 per cent gain.
UK 10-year gilt yields are adding 2 basis points to 1.20 per cent as the news is seen slightly increasing the chances of a future rate rise by the Bank of England, despite analysts stressing caution given the weakening three-month trend.
“The consumer, which has provided the main engine of UK economic growth in recent years, is showing signs of running out of steam,” said Chris Williamson, economist at IHS Markit. “Looking at the underlying trend, retail sales are falling at the fastest rate for seven years as households struggle with rising prices and subdued pay growth.”
Equities
The sanguine performance on Wall Street is helping deliver a steadier session in Europe, where the Stoxx 600 index is adding 0.5 per cent.
London’s FTSE 100 is underperforming with a 0.1 per cent gain as the firmer pound takes some shine off foreign currency earners.
In Asia, Japan’s Topix was flat, unable to recover any of the previous session’s 2.1 per cent fall, while Australia’s S&P/ASX 200 advanced 0.4 per cent, following its 1.6 per cent retreat on Wednesday.
Hong Kong’s Hang Seng was also barely changed, but mainland China’s Shanghai Composite rose 0.1 per cent.
Fixed income
The calmer tone across markets is crimping demand for the perceived safety of government bonds, nudging yields higher as prices dip.
The German 10-year Bund yield is up 1bp at 0.41 per cent but the equivalent maturity US Treasury yield is adding 2bp to 2.41 per cent.
The more policy-sensitive US two-year note is 1bp firmer at 1.26 per cent. The two-year yield hit 1.40 per cent on March 15, its highest since June 2009, but has pulled back after the Federal Reserve’s comments that accompanied its rate rise last week were deemed less hawkish than expected.
Short-term US bond yields have also fallen in response to lowered expectations about the Trump agenda.
Forex
And that reasoning is continuing to weigh on the US dollar. The US dollar index (DXY), which measures the buck against a basket of its peers, hit a 14-year high of 103.82 at the start of 2017 as the Trump trade was in full swing.
The DXY is up less than 0.1 per cent to 99.72 on Thursday, but remains below the 100 mark as investors await the healthcare vote.
The euro is off just 0.1 per cent to $1.0786 and the Japanese yen, which at one point on Wednesday hit ¥110.71 per dollar — its strongest in four months — is steady at ¥111.08.
The New Zealand dollar is up 0.1 per cent to US$0.7049 after the country’s central bank held interest rates at a record low 1.75 per cent and played down the prospects for possible rate rises this year.
Commodities
Gold is 0.1 per cent lower at $1,248 an ounce following a six-session winning streak during which investors shifted towards perceived haven investments.
Brent crude, the international oil benchmark, has lost early session gains to trade down 0.4 per cent at $50.43 a barrel.
During Wednesday trading, Brent briefly dropped below the $50 mark for the first time since November 30 as traders worried that increasing US production was counteracting Opec output cuts.
West Texas Intermediate, the main US contract, is off 0.5 per cent to $47.80.
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