BLBG: European Stocks Advance as Haven Demand Eases: Markets Wrap
Europe core government bonds fall with Treasuries; gold drops
U.K. stocks struggle as pound gains after election surprise
European markets struck a note of cautious optimism on Wednesday, with stocks rising and haven assets declining. U.K. shares fell as the pound extended its gain following the surprise election announcement.
Banks and automakers helped spur the rebound in Stoxx Europe 600 Index following the biggest one-day loss since November. Sterling edged higher after hitting the strongest level since October on Tuesday. Oil gained before key data is released today, the dollar strengthened and U.S. 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 U.K. 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 worldâ€™s biggest economy looks uncertain.
â€śWeâ€™re still hugely vulnerable to political risks,â€ť said Christopher Jeffery, asset allocation strategist at Legal & General Investment Management in London. â€śPolling for the first round of the French election is hugely tight. We have no clear indication of how the drama in North Korea will play out. And those factors are more important to us than the ebb and flow of earnings news in the short term.â€ť
Read our Markets Live blog here.
Hereâ€™s what investors are watching:
The Fedâ€™s Beige Book release on Wednesday will be keenly eyed for clues as to whatâ€™s driven the recent cooling of U.S. 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.
U.S. 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 Stoxx Europe 600 increased 0.3 percent as of 7:25 a.m. in New York, after dropping 1.1 percent on Tuesday.
Futures on the S&P 500 rose 0.3 percent after the underlying gauge slipped 0.3 percent Tuesday. IBM slumped in after-hours U.S. trading after its 20th consecutive quarterly sales decline.
The yen dropped 0.5 percent to 108.99 per dollar after gaining 0.5 percent Tuesday. The Bloomberg Dollar Spot Index rose 0.2 percent following a two-day decline.
The pound rose less than 0.1 percent to $1.2852 after its 2.2 percent surge Tuesday. The euro also slipped less than 0.1 percent.
The yield on 10-year Treasuries rose four basis points to 2.21 percent after an eight-basis-point plunge Tuesday.
The yield on German notes due in a decade also increased four basis points to 0.20 percent.
Gold declined 0.6 percent to $1,282.17 an ounce after closing at the highest since November in the previous session.
West Texas Intermediate crude oil rose 0.2 percent to $52.52 a barrel, after two days of losses.
The Shanghai Composite Index fell 0.8 percent, taking its four-day loss to 3.2 percent. The main Shenzhen market was also down a fourth day. The Hang Seng Index slid 0.4 percent and the Hang Seng China Enterprises Index dropped below the 10,000 level for the first time in two months.
Japanâ€™s Topix index was little changed, while Australiaâ€™s S&P/ASX 200 Index lost 0.6 percent and South Koreaâ€™s Kospi index fell 0.5 percent.