Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

GLOBAL MARKETS-European banks reassure on earnings, dollar holds near highs

Published 2016-10-27, 08:12 a/m
© Reuters.  GLOBAL MARKETS-European banks reassure on earnings, dollar holds near highs
XAU/USD
-
BARC
-
DBKGn
-
AAPL
-
MS
-
DX
-
GC
-
LCO
-
ESZ24
-
CL
-
CME
-
GB10YT=RR
-
US10YT=X
-
STOXX
-
TOPX
-
DXY
-
SX7P
-

(Adds U.S. open, updates prices)

By Vikram Subhedar

LONDON, Oct 27 (Reuters) - Reassuring results from some of Europe's biggest banks gave the region's beaten-down financials a boost on Thursday and helped offset weakness in industrial and tech stocks, while higher bond yields continued to underpin the dollar.

As corporate earnings continued to dominate headlines, growing expectations that the U.S. Federal Reserve will raise interest rates by the end of the year have kept gains in risky assets in check.

Stocks futures on Wall Street ESc1 were up 0.3 percent.

Markets are now pricing in a 74 percent chance that the U.S. Federal Reserve will raise interest rates at its December meeting, according to CME Group's (NASDAQ:CME) FedWatch tool, following a series of hawkish comments from Fed policymakers.

Bets that the Fed will hike rates have driven the dollar to nine-month highs against a basket of currencies .DXY this week and have supported 10-year U.S. Treasury yields US10YT=RR .

The "steepening of the U.S. yield curve works as a magnet for capital coming at this point in particular out of low yielding environments such as Japan and Switzerland," said Morgan Stanley (NYSE:MS) analysts, adding that these flows would continue to support the dollar.

The dollar index was little changed at 98.538, just off recent highs.

An overnight slide in oil prices and underwhelming results from Apple AAPL.O soured the mood in Asian stocks where technology sectors led losses in Japan .TOPX .

Europe's STOXX 600 .STOXX was off 0.1 percent, with defensive sectors such as healthcare and utilities providing the biggest boost to the index, underscoring investor caution.

Banks .SX7P , among the worst performing sectors in Europe this year, rose 0.4 percent, helped by a surprise third-quarter profit at Deutsche Bank DBKGn.DE and forecast-beating numbers from Barclays BARC.L which, like its U.S. rivals, enjoyed a significant pick-up in bond trading revenue.

Data from the European Central Bank showing lending growth to euro zone companies and households grew at a steady pace last month was also seen helping the sector which has come under heavy pressure this year over concerns about regulatory costs and eroding profitability. UK economy barely slowed in the third quarter despite the Brexit vote, with much stronger growth than expected, prompting a further selloff in bonds and spike in yields. 10-year government bond yields GB10YT=RR rose to a 10-day high of 1.2 percent as the strong data further diminished the chance of a fresh interest rate cut by the Bank of England next week.

At a time when the market is worried that central banks are stepping back from the ultra-accommodative stance of recent years, a reduced chance of a rate cut was enough to push benchmark bonds in Europe and U.S. to their highest level since the Brexit vote in late June.

In commodity markets, crude oil futures rebounded from earlier losses as a further drop in U.S. crude inventories countered investor doubts that OPEC will be able to implement a production cut. O/R

U.S. crude CLc1 edged up 0.2 percent to $49.28 a barrel, while Brent crude LCOc1 added 0.5 percent to $50.22.

Spot gold XAU= rose 0.2 percent to $1,269.38 an ounce. (Editing by Robin Pomeroy)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.