U.S. Opening Bell: Global Risks Slow Equity Gains; Euro Drops, Sterling Pops

Key Events

Shares in Europe and futures on the S&P 500, Dow and NASDAQ 100 have been seesawing this morning, following an uninspired Asian session earlier today that saw investors struggle to second-guess the possible outcome of ongoing global headwinds.

The STOXX 600 opened higher, with most sectors in the green, but later slipped into negative territory. The pan-European benchmark index remains below the shooting-star's high it posted yesterday, which itself confirmed the resistance of a high-wave candle posted on August 14.

The UK FTSE was dragged lower on Wednesday, weighed down by commodity stocks and a rebound in sterling. A dip in oil prices pushed oil majors BP (LON:BP) and Royal Dutch Shell (LON:RDSa) 0.5 percent and 0.9 lower respectively. Shares in mining companies were also dragged lower as the price of copper took a hit with London-listed BHP Billiton (LON:BLT) down 0.7 percent; Glencore (LON:GLEN) down 0.6 percent and Rio Tinto (LON:RIO) down 0.9 percent.

US futures reversed an early gain and have since been wavering around neutral levels, at time of writing managing to eke out small gains. In the Asian session, Australia’s S&P/ASX 200 climbed 0.75 percent, outperforming its regional peers, while China’s Shanghai Composite lagged, sliding 0.31 percent.

Global Financial Affairs

During yesterday's US session, stocks a slightly higher record, while Treasurys sold off.

The S&P 500 closed 0.03 percent higher, with gains in Real Estate (+1.19 percent) offsetting weakness in most other sectors. Technically, traders may have been discouraged by the index's failure to hold above the 2,900 milestone after the open.

The Dow Jones Industrial Average performed slightly better, ticking 0.06 percent higher. Although it failed to post a new record, the index resumed its upward trend from the April low.

The NASDAQ Composite outperformed its US peers with a 0.15 percent climb, posting a fresh record high, as technology stocks led the US equity advance.

Overall, investors remained indecisive even amid the recent record highs hit by US majors and ahead of the return to normal trading volume after the summer vacation. The clouds that have gathered over Donald Trump’s presidency have added to lingering global risks, ranging from the US-China trade war to the threat of emerging markets instability spilling over to other markets. Traders are positioning themselves based on headlines, which may spark considerable volatility going forward.

In FX markets, the US dollar jumped, wiping out losses made yesterday and Monday. Technically, the global reserve currency may still find resistance by the broken uptrend line, where its advance stumbled, as well as by the 50 DMA above it, at the 95.00 psychological level.

The pound edged higher despite reports that senior officials from both sides of the Brexit negotiation table now see the October deadline as unattainable, it jumped 0.4 percent against the weaker single currency on Wednesday morning. EUR/GBP was 0.9050.

At the same time the euro slipped lower, weighed by reports that Italy may seek support from the ECB via new bond purchases.

The Canadian dollar rallied on the news that the country was willing to make concessions on dairy products in order to reach a new North American trade deal.

The Australian dollar slid alongside government bond yields, pressured by a reduced outlook for interest rate hikes.

Bitcoin is set to end a rally that spanned five straight weekday sessions. Despite it being in a lingering bear market, year-to-date, hashrates for the Bitcoin network, which reflect mining activity, have picked up significantly. Could that be a positive signal for alt-currencies?

Crude oil inched lower this morning, for a second day, pressured by rising US supply. However at time of writing it reversed slightly, likely on the prospect that investment in Venezuelan production could halt the South American's output drop. Technically, the price hit a resistance area, as traders sold off when it reached the 50 and 100 DMAs.

Up Ahead

• Economists expect GDP figures due today will show the US economy grew at a slightly slower pace in the second quarter.
• Companies including Salesforce.com Inc (NYSE:CRM) and Dollar General (NYSE:DG) report their earnings results on Wednesday.
• In the UK, Frankie & Benny's owner Restaurant Group PLC (LON:RTN) report on Friday. In May the company announced a 1.8% drop in like-for-like sales and a restructuring plan that included the closure of 33 outlets. Management reported that full year profit expectations would still be met.
• UK lending data will be released on Thursday, with a focus on BoE consumer credit and mortgage lending.
• China’s official factory PMI are due Friday.
• Also on Friday, the Bank of Korea decides on interest rates, with weak jobs growth recently easing speculation of a possible hike.

Market Moves

All information provided is accurate as of time of writing

Stocks

• The U.K.’s FTSE 100 Index decreased by 0.3 percent.

• Futures on the S&P 500 Index climbed 0.1 percent, to the highest on record.

• The Stoxx Europe 600 Index gained 0.2 percent to the highest in almost three weeks.

• Germany’s DAX Index jumped 0.2 percent to the highest in almost three weeks.

• The MSCI Asia Pacific Index jumped 0.2 percent to the highest in almost three weeks.

• The MSCI Emerging Market Index fell 0.1 percent.

Currencies

• The British pound edged 0.1 percent higher to $1.2889.

• The Dollar Index increased 0.11 percent, paring a 0.18 percent earlier gain.

• The euro declined 0.1 percent to $1.168.

• The Japanese yen decreased less than 0.05 percent to 111.22 per dollar.

Bonds

• Britain's 10-year yield declined less than one basis point to 1.449 percent, the most substantial fall in more than a week.

• The yield on 10-year Treasurys slipped one basis point to 2.87 percent.

• Germany’s 10-year yield was unchanged at 0.38 percent, the highest in three weeks.

• The spread of Italy's 10-year bonds over Germany's increased one basis point to 2.8121 percentage points to the most significant premium in more than a week.

Commodities

• West Texas Intermediate crude fell less than 0.05 percent to $68.50 a barrel.

• Gold climbed 0.3 percent to $1,204.27 an ounce.