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Euro gains on strong manufacturing data, oil falls

Aug 23 2017 13:01
Robert Brand, Bloomberg

Cape Town - The euro was one of the standout gainers in an otherwise listless day in markets, as strong European data boosted confidence in the region’s growth. Gold and yen benefited as comments from President Donald Trump provoked another bout of investor caution.

The surprise gain in a gauge of euro-region manufacturing did little to spur the Stoxx Europe 600 Index, however, which retreated led by WPP Plc after the world’s largest advertising company cut its revenue forecast.

Trump’s threats to end the flagship North American trade agreement and shut down the government over funding for his Mexican wall drove futures on the S&P index lower. Oil turned back toward $47 a barrel after US gasoline stockpiles rose.

Surging demand for ‘Made in the Euro Area’ goods is feeding an economy that is creating jobs and finally also seeing price growth accelerate, providing some succor for the European Central Bank before the start of a central bankers’ meeting in Jackson Hole tomorrow.

But on the other side of the Atlantic, Trump’s latest comments once again raised concerns about the administration’s ability to deliver fiscal stimulus, while heightening unease about the future of global trade.

“The Nafta hot air may be as much an excuse to take a step back after Wall Street’s surge yesterday, as it is a legitimate concern about the president not appreciating nuances of inter-dependence embedded in trade deals,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “The ‘she loves me, she loves me not’ thought process could lead to on-off markets.”

Geopolitical events continue to hover in the background. Trump said during his speech that North Korean leader Kim Jong Un is beginning to respect the US, the latest comments that suggest his administration is moving closer to seeking talks over Pyongyang’s nuclear arsenal. But the US tightened its financial restrictions on North Korea, slapping sanctions on Chinese and Russian entities it accused of assisting Pyongyang’s development of nuclear weapons and ballistic missiles.

Among other key events looming this week:

Combined sales of new (data on Wednesday) and previously owned (Thursday) US homes probably edged up in July from the prior month, indicating a still robust real estate market held in check by rising property prices, economists forecast.

Here are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index sank 0.3% as of 12:41.

• The MSCI All-Country World Index dipped less than 0.05%.

• The UK’s FTSE 100 Index declined less than 0.05%.

• Germany’s DAX Index fell 0.1%.

• Futures on the S&P 500 Index decreased 0.3%.

Currencies

• The euro advanced 0.2% to $1.1785. 

• The Bloomberg Dollar Spot Index dipped less than 0.05%.

• The British pound declined 0.2% to $1.2799, the weakest in more than seven weeks. 

• The Japanese yen climbed 0.2% to 109.35 per dollar. 

Bonds

• The yield on 10-year Treasuries gained less than one basis point to 2.21%.

• Germany’s 10-year yield increased less than one basis point to 0.40%.

• Britain’s 10-year yield fell less than one basis point to 1.085%.

Commodities

• West Texas Intermediate crude fell 0.3% to $47.69 a barrel. 

• Gold increased 0.1% to $1 286.99 an ounce.

Asia

• Japan’s Topix index rose 0.3% at the close, the Kospi index added 0.1% and Australia’s S&P/ASX 200 Index declined 0.2%.

• The Shanghai Composite Index fluctuated before slipping 0.1%.

• The MSCI Asia Pacific Index rose 0.2%.

• The Japanese yen climbed 0.2% to ¥109.35/$.

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