Euro Weakens Ahead of Meeting, Stocks Retest Highs: Markets Wrap

Stocks and U.S. equity futures advanced as the euro came off a 14-month high ahead of the European Central Bank’s policy meeting Thursday.The dollar edged higher after touching its lowest since September as the U.S. health-care reform bill imploded, casting further doubt on President Donald Trump’s policy agenda. The pound was steady following its decline on a disappointing U.K. inflation print, while the Australian and New Zealand dollars strengthened. Treasuries weakened and gold and oil fell.Global equity markets returned toward all-time highs after the S&P 500 Index and Nasdaq Composite climbed to record closes.

The market-implied probability of a Federal Reserve rate hike by year-end has declined to about 40 percent from 60 percent on July 7, based on the current effective fed funds rate and the forward overnight index swap rate.

Bonds and currencies: The euro was down 0.2 percent at $1.1531 as of 8:10 a.m. U.K time. The currency on Tuesday climbed 0.7 percent to $1.1554, its highest since May 2016, amid speculation the ECB could signal its intent to scale back monetary stimulus.
The pound was little changed at $1.3038 and the Bloomberg Dollar Spot Index was up 0.1 percent after its 0.5 percent slide yesterday. The yenwas flat at 112.05 per dollar.

Stocks: The Euro Stoxx 50 advanced 0.4 percent after sliding 1.1 percent the previous day. The Stoxx Europe 600 gained 0.6 percent after also falling 1.1 percent Tuesday.
The MSCI ACWI Index of emerging and developed markets rose 0.1 percent, extending gains to a ninth day.
Australia’s S&P/ASX 200 Index rose 0.8 percent as bank shares climbed. Analysts said new capital requirements looked fairly benign. More on that story here.
Futures on the S&P 500 Index added 0.1 percent after the underlying gauge hit a record close at 2,460.61.

Commodities: WTI crude slipped 0.4% to 46.20$ a barrel on reports of an increase on U.S. stockpiles. Gold dropped 0.2% to 1,239.92 an ounce. Iron Ore futures jumped 3.5%.

Source: Bloomberg Pro Terminal

Trader Bozhidar Arabadzhiev

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