Stocks trade near record before ECB, dollar rises

Dubai - Central banks were once again front and centre in global markets on Thursday, with stocks trading near a record as investors await the ECB’s latest rate decision.

The Bank of Japan (BoJ) maintained its mega monetary stimulus, sinking the yen and lending momentum to a dollar advance.

The MSCI All-Country World Index pared an earlier gain but remained at about its highest-ever level. 

The greenback strengthened for a second day after closing at the lowest in 11 months on Tuesday, and the yen headed for its biggest drop in almost two weeks after policy makers delayed the time-frame for reaching their inflation target - a sign stimulus will be in place for a while to come.

Oil managed to hold onto Wednesday’s increase.

All eyes will now turn to the ECB for clues on the path of monetary policy. Like the BoJ, Europe’s central bank is forecast to keep rates on hold. But a report that the bank has been examining options for asset purchases has added to speculation that President Mario Draghi may concede the time is approaching to adjust the region’s bond-buying program.

“After having triggered unintended rate-hike speculation with his by now notorious ‘Sintra speech,’ ECB President Mario Draghi will doubtless choose his words very carefully today,” analysts at Commerzbank including Thu Lan Nguyen said in a research note.

 “His task will be quite difficult. Market participants agree that the ECB will shortly begin to exit its ultra-expansionary monetary policy. It will probably announce another tapering of its bond purchases by the end of the year - and we believe it will pave the way for such a step by deleting the option of another increase of its monthly bond purchases.”

Here are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index rose 0.2% as of 13:15.

• The MSCI All-Country World Index was little changed.

• The UK’s FTSE 100 Index gained 0.7% to the highest in a month on the biggest rise in more than a week.

• Germany’s DAX Index gained 0.5%, the largest rise in more than a week.

• The MSCI Emerging Market Index fell 0.1%, the first retreat in almost two weeks. The VIX index on Wednesday closed below 10 for a record fifth consecutive day.

Currencies and bonds

• The euro fell 0.1% to $1.1504.

• The British pound fell 0.5% to $1.2962, the weakest in a week.

• The Bloomberg Dollar Spot Index climbed 0.3%, the biggest increase in more than two weeks.

• The Japanese yen fell 0.3% to ¥112.35/$, the largest dip in almost two weeks.

• The yield on 10-year Treasuries was little changed at 2.27%.

• Germany’s 10-year yield rose one basis point to 0.55%, the first advance in a week. Britain’s 10-year yield rose one basis point to 1.203%.

Commodities

• Gold fell 0.3% to $1 237.33 an ounce, the largest dip in almost two weeks.

• West Texas Intermediate crude was unchanged at $47.12 a barrel, the highest in more than six weeks.

• The Bloomberg Commodity Index rose 0.1% to the highest in almost eight weeks.

Asia

• The Aussie traded lower as a characteristically volatile monthly jobs report for June showed a surge in full-time employment.

•  It’s the best-performing G-10 currency this year, climbing 10%.

• Australia’s S&P/ASX 200 Index gained 0.5% and Japan’s Topix Index rose 0.7% to close at its highest in nearly two years.

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