The dollar strengthened, while European equities and US equity futures fluctuated as investors focused on comments from the Federal Reserve and the European Central Bank about the outlook for monetary stimulus.
In Europe, board member Francois Villeroy de Galhau said the ECB will take an easy stance as long as it takes, and US investors take comfort in comments from two Federal Reserve officials reversing the possibility of short-term tapering off bond purchases.
Federal Reserve Bank of St. Louis President James Bullard said getting through the pandemic remains the policy priority, a sentiment echoed by Boston Fed chief Eric Rosengren. That allayed concerns that the Fed may be heading for a repeat of the so-called tapering tantrum in 2013, when the withdrawal of monetary stimulus measures led to volatility in financial markets.
“Coordinated comments from Fed governors” help lower bond yields, Deutsche Bank AG strategists, including Jim Reid, said in a note to clients. “We’ve only had seven working days this year and we’ve already had a full 360 degree tapering debate by the Fed.”
The European Stoxx 600 was flat, with losses at banks and travel stocks that exceeded the merger and acquisition announcements.
Among the winners of the day, French grocer Carrefour SA rose 10% after Alimentation Couche-Tard Inc., the supermarket giant that owns the Circle K chain, said it is investigating a transaction. Telefonica SA also jumped 10% after American Tower Corp. said it would buy telecommunications towers in Europe and Latin America from the company.
General Motors Co. added 3.6% in US pre-market trading. On Tuesday, GM announced plans to get into electric vehicles by creating a wholly owned company called BrightDrop that will supply battery-powered vans and offer fleet management services.
In Japan, the Nikkei 225 outperformed and hit a US dollar record. Stocks also rose in South Korea, while stocks in Hong Kong remained flat.
New York oil futures rallied for a seventh session, climbing to $ 54 a barrel in its longest streak of gains since February 2019. The combination of a sector report pointing to a further decline in US crude oil stocks, Saudi output cuts Arabia and a weaker dollar are all driving the rise in energy prices.
Here are some important events coming up:
- JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., as well as companies ranging from Taiwan Semiconductor Manufacturing Co. to Infosys Ltd., are among those due to report earnings.
- The EIA crude oil inventory report is due on Wednesday.
- Christine Lagarde of the European Central Bank speaks online conference Wednesday.
- US consumer price inflation rates are expected on Wednesday.
- US President-elect Joe Biden is planning to leave proposals for tax aid on Thursday.
- Federal Reserve Chairman Jerome Powell takes part in a webinar on Thursday.
- The first data on unemployment benefits in the US is expected on Thursday.
- US retail, industrial manufacturing, corporate inventories and consumer confidence figures are scheduled for Friday.
These are some of the main movements in markets:
Shares
- Futures on the S&P 500 Index changed little at 10:56 am London time.
- The Stoxx Europe 600 Index has changed little.
- The MSCI Asia Pacific Index rose 0.5%.
- The MSCI Emerging Market Index climbed 0.5%.
Currencies
- The Bloomberg Dollar Spot Index rose 0.2% to 1,122.20.
- The euro fell 0.2% to $ 1.2179.
- The British pound rose 0.1% to $ 1.3672.
- The Japanese yen weakened 0.2% to 103.94 per dollar.
Bonds
- The yield on 10-year Treasuries fell by one basis point to 1.12%.
- Two-year government bond yields rose by less than one basis point to 0.15%.
- The German 10-year yield fell by three basis points to -0.49%.
- The UK 10-year yield fell by two basis points to 0.335%.
Raw materials
- West Texas Intermediate crude gained 0.2% to $ 53.36 a barrel.
- Gold gained 0.1% to $ 1,855.23 an ounce.
– With the help of Steve Matthews and Vivien Lou Chen