The unwinding of the ECB’s QE impact on markets was not contained in the euro, 10 year German bunds fell further on Monday, finding a temporary floor at the 200 month average price.
Selling has been present in German government bonds ever since the benchmark 10 year bund yield came close to going negative at just 0.05%. UK 10 year gilts came in for the most selling across European government debt markets with the added uncertainty surrounding the general election.
The issues in Greece remained an overhang for European markets on Wednesday. The Greeks have been talking the talk of reforms to their economy in order to achieve the next bailout. The overturning of civil service reforms put in place by the last government in Athens suggests they’re far from walking the walk.
Strength from the oil sector alongside big gains from Sage Group (LONDON:SGE) and Imperial tobacco (LONDON:IMT) helped the FTSE 100 outperform shares in Europe but the first loss in a decade from supermarket giant Sainsbury’s pulled the index into the red.
US
The Dow Jones dipped further below 18K on Wednesday with Microsoft shares a drag following reports of a possible bid for NYSE-listed cloud software provider Salesforce.com with energy shares Exxon and Chevon the outperformers thanks to rally in oil prices.
Twitter (NYSE:TWTR) continued its slide after the recent earnings miss, down as much as 2% on Wednesday with Tesla also lower ahead of its earnings report after the closing bell.
FX
The US dollar weakness continued against major currencies after ADP data saw worse than expected job growth in April, perhaps setting the stage for another disappointment in Friday’s NFP unemployment report.
The euro flew higher, bolstered by better than expected purchasing manager survey data for the Eurozone’s service sector. EUR/USD reached its highest since late February above 1.1350.
The British pound gained against the US dollar but fell against the euro after its own service sector PMI data suggested that talk of a slowdown caused by apprehension ahead of the general election could be a little overblown.
Commodities
Crude oil saw another day of new 2015 highs on Wednesday, with both Brent and WTI contracts gaining over 2%, confirming that, at least a temporary bottom was made in January. IEA inventory data showed weekly oil inventories fell for the first time in four months, dropping -3.8M barrels.
The breakout higher in crude oil futures preceded the drop in US crude stockpiles since the halving in the number of oil rigs since November had to at some point impact production.
Metals markets were mostly flat to lower on Wednesday ahead of Friday’s non-farm payrolls data.
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