* European shares up 0.2%
* Fed soothes inflation fears
* U.S. equity futures edge up
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STOXX BELOW PEAK, BANKS DIP, SOME M&A ACTION (0740 GMT)
It seems the dovish-sounding remarks from central bankers in
the U.S. and Europe are keeping investors in a state of ease but
the momentum behind this year's recovery rally has faded.
The STOXX 600 is just above parity in early deals,
up 0.2%, helped by gains in growth plays like the big luxury
groups and tech, while banks and other cyclical plays look out
of favour, as bond yields head south.
A stronger than expected guidance is lifting Marks and
Spencer while some sparse M&A action is adding some
pepper to the otherwise muted session.
Takeovers offers are lifting shares in UK's Spire Healthcare
and Vectura are up 25% and 31% respectively,
while Italian bank stocks are outperforming on expectations of
possible dealmaking.
Here's your opening snapshot:
(Danilo Masoni)
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WHEN THE HAWKS STEP FORWARD (0648 GMT)
World stocks may be taking comfort from signs that central
banks will keep the stimulus taps open but the chorus of hawks
making the case against is on the rise.
And so New Zealand's dollar is up 1% this morning after the
country's central banks signalled at least one quarter point
hike by September 2022.
Wellington's decision comes at a time when Federal Reserve
policymakers have begun to acknowledge they are closer to
debating when to pull back some of their crisis support. The
shift in tone is a change from just a month ago when Chair
Jerome Powell said it was "not yet" time to even contemplate
having that conversation.
Markets, for now, are ignoring the shift in central bank
speak with Asian stocks a sea of green in holiday-stricken trade
while European and U.S. stock futures broadly higher.
Asian stocks were a touch firmer as a daily currency fixing
by the Chinese central bank to near three-year highs was taken
as a sign of optimism by investors.
In currencies, the dollar struggled near its lowest levels
this year thanks to a flying kiwi and a stronger yuan.
Bond markets also remained sanguine on the outlook of
monetary policy. Fed’s vice chair Richard Clarida’s comments on
Tuesday to engineer a "soft landing" as stimulus is withdrawn
and keep a lid on inflation kept Treasury yields within the
well-worn established ranges since March.
In the euro area, comments from ECB board member Fabio
Panetta that the bank should not reduce the pace of asset
purchases after its June 10 meeting is keeping German Bund
yields below last week's 2-year high.
A weaker dollar pushed gold prices above the key
psychological level of $1,900 per ounce, while Bitcoin
stabilised around the $40,000 mark after a roller coaster ride.
In corporate news, Volkswagen's board agreed Lamborghini
would remain part of the company after it received a 7.5 billion
euro offer for the supercar brand. Britain's competition
regulator is reviewing AstraZeneca’s planned $39 billion
takeover of U.S.-based Alexion on whether it could reduce
competition in Britain or other markets.
Key developments that should provide more direction to
markets on Wednesday:
- British Prime Minister former advisor Dominic Cummings to
give testimony on the UK handling of the pandemic.
- Swedish Riksbank Financial Stability Review.
- Central bank speaker corner: France’s Villeroy, Canada’s
Lane, Fed’s Quarles.
- Data: French business confidence, manufacturing
confidence, US Mortgage Applications
(Saikat Chatterjee)
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EUROPE SEEN MARGINALLY HIGHER (0533 GMT)
European shares are set to rise slightly today following
gains in Asia on the back of comments from Fed officials
reaffirming a dovish monetary policy stance.
Futures on the euro STOXX 50 and DAX
indexes are both rising 0.4% while FTSE futures are
trading just flat. U.S. futures also pointed to slight gains on
Wall Street later on after marginal declines on Tuesday.
(Danilo Masoni)
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