- Stocks, Euro Steady as Earnings, ECB in Focus
European shares treaded water, while the dollar and euro held steady as investors awaited a policy meeting from the European Central Bank later in which it is expected to announce a reduction in monetary stimulus.
Gains in miners and household goods stocks were offset by losses in bank shares after earnings reports from Deutsche Bank AG and Barclays Plc. Spanish shares steadied ahead of an address to the regional parliament by Catalonia’s President Carles Puigdemont on Thursday afternoon. European bonds were little changed, and U.S. Treasuries were flat after yields climbed to a seven-month high on Wednesday in anticipation of the announcement of a new chair for the Federal Reserve. South Africa’s rand extended its decline amid expectations of a downgrade after the country’s finance minister on Wednesday signaled more borrowing.
The ECB is expected to announce a reduction in the size of its monthly bond buying at its policy meeting, the biggest scheduled event for markets this week. Any surprises from President Mario Draghi could be expected to reverberate across currencies, fixed income and equity markets.
“We expect the ECB to extend QE by 30 billion euros per month for 9 months, offsetting less QE with stronger forward guidance on rates,” said economists including Gilles Moec of Bank of America Merrill Lynch in a recent note. “With markets already expecting a dovish tone, it will be hard for the euro to weaken but at least we would expect Draghi to try to avoid a stronger euro after the meeting.”
In the latest development on who the next Fed chair will be, U.S. President Donald Trump seems to have ruled out National Economic Council Director Gary Cohn. An announcement is imminent with Trump expected to name the next Fed head before Nov. 3.
In Asia, stocks were little changed. The Kospi underperformed even as data showed South Korea’s economic growth picked up more than expected in the third quarter. China began marketing its first sovereign dollar bonds since 2004 on the heels of the twice-a-decade Communist Party congress.
Here are the main moves in markets:
Stocks
- The Stoxx Europe 600 Index fell 0.2 percent as of 8:23 a.m. in London.
- The MSCI All-Country World Index fell less than 0.05 percent.
- The U.K.’s FTSE 100 Index fell less than 0.05 percent to the lowest in more than three weeks.
- Futures on the S&P 500 Index dipped less than 0.05 percent to the lowest in more than a week.
Currencies
- The Bloomberg Dollar Spot Index fell less than 0.05 percent.
- The euro climbed 0.1 percent to $1.1826, the strongest in a week.
- South Africa’s rand fell 1 percent to 14.1931 per dollar, hitting the weakest in 11 months.
Bonds
- The yield on 10-year Treasuries climbed less than one basis point to 2.44 percent, the highest in about seven months.
- Germany’s 10-year yield advanced less than one basis point to 0.48 percent, the highest in 12 weeks.
Commodities
- West Texas Intermediate crude dipped 0.3 percent to $52.04 a barrel.
- Gold advanced 0.2 percent to $1,279.79 an ounce, the largest gain in a week.
- Copper decreased 0.2 percent to $6,997.00 per metric ton.
