Record growth in eurozone boosts the area’s currency and bond yields

London — The European single currency and eurozone government bond yields rose on Wednesday after a survey showed the bloc’s manufacturing businesses clocked up their best month of growth in six-and-a-half years.

Forecast-beating surveys in the eurozone’s two biggest economies, France and Germany, helped pull the euro up against the dollar, which had wobbled against the yen overnight on comments from US President Donald Trump.

The pan-European Stoxx 600, however, was dragged down by unloved media stocks with WPP shedding more than 10% after the world’s largest advertising group cut its sales forecast.

“At a broad level what purchasing manufacturers indices are telling you is that the momentum of the eurozone recovery continues and the strength of the euro is not containing it,” said Investec economist Philip Shaw.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan inched up to a two-week high, before pulling back.

The dollar wobbled against the yen following campaign-rally threats by President Donald Trump to force a government shutdown over funding a border wall.

Financial markets have been buffeted in recent weeks by heightened tensions on the Korean peninsula, turmoil in the White House, and growing doubts about Trump’s ability to fulfil his economic agenda.

A gathering of global central bankers this week in Jackson Hole, Wyoming, has prompted investors to rebalance their currency positions, leading them to reduce some of their short dollar bets.

Australian stocks were down 0.3% and South Korea’s Kospi gave back earlier modest gains to slip 0.1%.

Japan’s Nikkei bucked the trend and rose 0.3%, lifted as the dollar strengthened against the yen.

The Nikkei took its cues from Wall Street, which saw the Dow rise 0.9%, the S&P 500 climb 1% and the Nasdaq gain 1.4% on Tuesday as technology shares rallied.

Dollar slip

The dollar was down slightly against the yen at ¥109.38 by 9am GMT, back near a day’s low plumbed after Trump told supporters in Arizona “If we have to close down our government, we’re building that wall” in reference to his pledge to tighten immigration controls at the US-Mexican border.

The greenback remained clear of a four-month low of ¥108.605 plumbed last week, when turmoil in the White House and geopolitical tensions took a toll on the currency.

The dollar index against a basket of six major currencies was down slightly at 93.409 after rising 0.5% the previous day.

The euro was up 0.2% at $1.1784 after slipping about 0.5% Tuesday on weaker-than-expected German investor confidence.

Speeches from Fed chairperson Janet Yellen and European Central Bank president Mario Draghi will headline the annual Jackson Hole event, although neither are expected to announce any significant policy.

In commodities, Brent crude slipped 0.4% to $51.64 a barrel after data showed a surprise build in US gasoline inventories. Improving Libyan output also added to oversupply concerns in the crude oil market.

Copper retreated from a three-year high, and other base metals also fell or trimmed gains, as speculators and funds locked in some profits after a steep rally.

Copper on the London Metal Exchange CMCU3 was down 0.2% at $6,564 per tonne after striking $6,649 on Tuesday, the highest since November 2014.

Spot gold was a shade higher at $1,286.26 an ounce, after losing 0.5% overnight as the precious metal felt the pressure from a stronger dollar. Spot gold had reached a nine-month high above $1,300.00 an ounce on Friday.

Reuters

Leave a Reply

Your email address will not be published. Required fields are marked *

*

17 − 14 =