US equities set to open higher, following European indices

Tuesday 12.55 BST

What you need to know

  • S&P 500 set to open higher
  • Dollar up from 10-day low, euro dips
  • European equities rise, led upwards by miners
  • China’s renminbi hits two-week high
  • Oil loses momentum after volatile trading
  • Gold slips after highest close since early June

Hot Topic

US markets are set to follow European equities higher, with futures trading suggesting a 0.2 per cent rise in the S&P 500 index.

European stock markets are heading upwards after a broadly cautious trading session on Monday, in which geopolitics and the Jackson Hole gathering of central bankers on Thursday weighed on sentiment.

The FTSE 100 is up 0.7 per cent in Tuesday’s trading, led higher by mining and materials stocks after copper producer Antofagasta reported higher metal prices, and BHP Billiton announced plans to sell its US shale oil business.

The Stoxx 600 is up 0.5 per cent and the Xetra Dax is 0.7 per cent higher.

The euro is 0.4 per cent lower at $1.176 as traders contemplate geopolitical tensions and central banks’ monetary policy dilemmas, in advance of the global gathering of policymakers at Jackson Hole later this week.

The eurozone’s single currency has been trading broadly sideways since early this month after coming off its peak, which saw it briefly top $1.19.

European Central Bank president Mario Draghi will be watched for clues about the direction of the currency, and on how the European Central Bank plans to wind down its €2tn quantitative easing programme, when he speaks at the event.

Leading Quote

“The calm before the storm continues for the second consecutive session this week. There is little on the calendar likely to . . . give the market fresh impetus,” says Peter Chatwell, a strategist at Mizuho.

“The Bundesbank August report published yesterday painted a relatively optimistic economic picture, upgrading its growth forecast. The most notable discussions of the report were arguably around the failure of wages to pick up in the face of better economic activity and about the negative impact the higher euro has on import prices. Both themes . . . underpin our macro bullish Bund view. Our feeling is that the market is generally coming around to this view and to the benign outlook for monetary policy it implies.”

Forex

The dollar index, a measure of the currency against a basket of peers, is up 0.5 per cent at 93.510 after hitting a 10-day low of 92.997 on Monday.

The Japanese yen is among the biggest movers of major currencies, strengthening 0.4 per cent against the US dollar to ¥109.4.

China’s onshore renminbi rose against the dollar to its strongest level in almost two weeks, at Rmb6.6571, after the People’s Bank of China fixed the currency’s daily trading midpoint at Rmb6.6644.

Equities

Asia-Pacific equities rose amid a spate of positive corporate earnings news from the region. Hong Kong’s Hang Seng index is up 0.9 per cent, driven by the real estate sector and financials.

The Australian benchmark S&P/ASX 200 is up 0.4 per cent.

Pakistan’s main stock exchange in Karachi saw prices fall more than 2 per cent after US President Donald Trump sounded a threatening note; in a speech he accused the country of acting as a “safe haven” for Taliban militants.

Fixed income

The yield on the 10-year US Treasury, which moves inversely to its price, is 3 basis points higher at 2.208 per cent. European bond yields are steady, with the 10-year German Bund at 0.411 per cent.

Commodities

The upward turn of oil prices has lost momentum. The international benchmark, Brent crude, is flat at $51.64, down from $52.14 a barrel earlier in European morning trading. Recent sharp moves saw it gain 3.7 per cent late last week, before falling more than 2 per cent on Monday.

US marker West Texas Intermediate is up by 0.1 per cent to $47.41, having hit $47.74 a barrel earlier in the day.

Gold is down 0.4 per cent to $1,285.49, following its highest close since early June on Monday.

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