London - European markets struck a note of cautious optimism on Wednesday, with stocks rising and haven assets declining. UK shares edged lower as the pound held most of its gains following the surprise election announcement.
Commodity companies helped spur the Stoxx Europe 600 Index, which was rebounding following the biggest one-day loss since November. Sterling pulled back slightly after reaching the strongest level since October on Tuesday. Oil fluctuated before key data is released today, the dollar strengthened and US stock futures pointed to a higher opening.
After drops on Tuesday, investors seem to be taking the addition of yet another macro risk in their stride. The UK vote joins a slew of elections to be held this year against a backdrop of rising populism in the Europe, while geopolitical tensions are simmering over both North Korea and Syria and the pace of monetary tightening in the world’s biggest economy looks uncertain.
Here’s what investors are watching:
The Fed’s Beige Book release on Wednesday will be keenly eyed for clues as to what’s driven the recent cooling of US economic activity. The first round of voting in the French election is on Sunday and the two leading candidates will run off in a winner-takes-all contest on May 7.
Morgan Stanley rounds out earnings for Wall Street’s biggest banks today. It could get a boost from healthy fixed-income trading after JPMorgan, Citigroup and Bank of America reported better-than-expected revenue from that business, with Goldman Sachs the notable laggard.
US oil inventories fell 840 000 barrels last week, according to the API. More official EIA data due today may show a larger drop of 1.4 million barrels.
The Shanghai Composite Index fell 0.8%, taking its four-day loss to 3.2%. The main Shenzhen market was also down a fourth day. The Hang Seng Index slid 0.4% and the Hang Seng China Enterprises Index dropped below the 10 000 level for the first time in two months. Japan’s Topix index was little changed, while Australia’s S&P/ASX 200 Index lost 0.6% and South Korea’s Kospi index fell 0.5%.
The Stoxx Europe 600 increased 0.3% as of 11:10, after dropping 1.1% on Tuesday. Futures on the S&P 500 rose 0.3% after the underlying gauge slipped 0.3% on Tuesday. IBM slumped in after-hours US trading after its 20th consecutive quarterly sales decline.
The yen dropped 0.4% to ¥108.86/$ after gaining 0.5% on Tuesday. The Bloomberg Dollar Spot Index rose 0.2% following a two-day decline. The pound dropped less than 0.2% to $1.2821 after its 2.2% surge on Tuesday. The euro also slipped less than 0.2%.
The yield on 10-year Treasuries rose three basis points to 2.2% after an eight-basis-point plunge on Tuesday. The yield on German notes due in a decade also increased three basis points to 0.18%.
Gold declined 0.5% to $1 282.84 an ounce after closing at the highest since November in the previous session. West Texas Intermediate crude oil was little changed at $52.43 a barrel, after two days of losses.