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Global stocks recover from wobble as European Central Bank sends euro, yields higher

13 January 2018

In the 12 months through December, the PPI rose 2.6 percent after accelerating 3.1 percent in November.

MSCI's broadest gauge of the world's stock markets hit yet another record high and was on track to rise for its eighth of the nine business days so far this year - for a total increase of 3.5 percent.

The euro traded at $1.1997, up from $1.1937 late Tuesday in NY.

He said: "A little bit of risk-off in the Nikkei and DAX appears to be weighing on early premarket indications of a lower United States open for the S&P 500 and the Dow". "If any of those were to be shaken that would be a big problem", said Jeanne Asseraf Bitton, head of cross-asset research at Lyxor Asset Management.

LONDON, Jan 12 (Reuters) - The euro surged above $1.21 to a three-year high Friday on bets the European Central Bank is getting ready to wind down its huge monetary stimulus, and after German Chancellor Angela Merkel reached a deal that should lead to the formation of a "grand coalition" government.

Expectations are for a rise of 0.3% for both manufacturing and industrial production, both significant improvements on the October numbers, while the latest trade balance data is expected to show a deficit of £1.5bn.

The rally came after official data showed retail sales climbed 1.2 percent in November, three times the market forecast and the biggest gain since early 2013.Sales were in large part boosted by demand for new iPhones and Black Friday special offers, so there was a risk of a pullback in December.

While the currency's rise has reflected growing optimism over the bloc's economic recovery, investors have flagged it as a potential brake on stocks.

The minutes from the ECB's December meeting said the central bank should revisit its communication stance in early 2018 and gradually adjust its language to reflect improved growth prospects.

Lyxor's Bitton said Bund yields were already near to hitting her target for the first quarter.

An ECB spokesman declined to comment on the market reaction to the policy account.

Specifically, the European Central Bank might soften its pledge to continue its EUR2.5 trillion bond-buying program, known as quantitative easing, until inflation reaches its target of just below 2%.

Bloomberg News had reported on Wednesday that Chinese officials reviewing the country's foreign exchange holdings had recommended slowing or halting purchases of U.S. Treasury bonds, pushing 10-year yields higher and the dollar lower.

Benchmark 10-year notes gained 6/32 in price to yield 2.53 percent, after rising as high as 2.597 on Wednesday, the highest since March 15.

"The sooner the market realises that the end of European Central Bank tapering is coming, it will start asking itself what the next step is, and that's European Central Bank rate hikes".

The Dollar is doing better against Asian currencies with the USD/JPY at 111.248 Yen, up 0.03% and the AUD/USD was trading at $0.7893, down 0.047%.

And bitcoin was up 5.7% at $14,000 on the Luxembourg-based Bitstamp exchange today.

Wall Street surged to record highs on Thursday as rising oil prices lifted energy stocks and investors bet on a strong US corporate earnings season.

Analysts say that means investors are pricing in a 50-60 percent chance of a 10 bps increase in the ECB's deposit rate - the minimum it is likely to increase - from minus 0.4 percent.

Global stocks recover from wobble as European Central Bank sends euro, yields higher