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Sydney - European shares treaded water, while the dollar and euro held steady as investors awaited a policy meeting from the European Central Bank in which it is expected to announce a reduction in monetary stimulus.
Gains in miners and household goods stocks were offset by losses in technology and bank shares after earnings reports from Deutsche Bank and Barclays.
Spanish shares steadied ahead of an address to the regional parliament by Catalonia’s President Carles Puigdemont on Thursday afternoon.
European bonds were little changed, and US Treasuries were flat after yields climbed to a seven-month high on Wednesday in anticipation of the announcement of a new chair for the Federal Reserve.
South Africa’s rand extended its decline amid worries of a rating downgrade after the country’s finance minister on Wednesday signalled more borrowing. West Texas crude fell a second day.
The ECB is expected to announce a reduction in the size of its monthly bond buying at its policy meeting, the biggest scheduled event for markets this week. Any surprises from President Mario Draghi could be expected to reverberate across currencies, fixed income and equity markets.
In Spain, the Catalonian independence bid faces a critical 48 hours, as separatists decide whether to succumb to Madrid’s authority, or whether to forge their own course.
"We expect the ECB to extend QE by 30 billion euros per month for 9 months, offsetting less QE with stronger forward guidance on rates," said economists including Gilles Moec of Bank of America Merrill Lynch in a recent note.
"With markets already expecting a dovish tone, it will be hard for the euro to weaken but at least we would expect Draghi to try to avoid a stronger euro after the meeting."
In the latest development on who the next Fed chair will be, US President Donald Trump seems to have ruled out National Economic Council Director Gary Cohn. An announcement is imminent with Trump expected to name the next Fed head before November 3.
In Asia, stocks were little changed. The Kospi underperformed even as data showed South Korea’s economic growth picked up more than expected in the third quarter.
China began marketing its first sovereign dollar bonds since 2004 on the heels of the twice-a-decade Communist Party congress.
These are some of the key events coming up:
Hong Kong reports on imports and exports on Thursday, while Japan updates on CPI Friday. The US economy probably expanded at about a 2.5% annualised pace in the third quarter, restrained in part by the effects of two hurricanes, economists forecast the government to report on Friday.
Norway’s Norges Bank and Sweden’s Riksbank rate decision on Thursday.
And here are the main moves in markets:
Stocks
The Stoxx Europe 600 Index increased 0.1% as of 9:22am in London. The MSCI All-Country World Index fell less than 0.05% to the lowest in more than two weeks. The UK’s FTSE 100 Index advanced 0.2% the largest gain in more than a week.
Futures on the S&P 500 Index decreased less than 0.05% to the lowest in more than a week.
Currencies
The Bloomberg Dollar Spot Index fell less than 0.05%. The euro climbed less than 0.05% to $1.1816, the strongest in a week. South Africa’s rand dipped 0.9% to 14.1744 per dollar, hitting the weakest in 11 months with its fifth consecutive decline.
Bonds
The yield on 10-year Treasuries fell less than one basis point to 2.43%. Germany’s 10-year yield decreased one basis point to 0.48%.
Commodities
West Texas Intermediate crude dipped 0.3% to $52.04 a barrel. Gold advanced less than 0.05% to $1 278.05 an ounce. Copper decreased 0.2% to $6 995.00 per metric ton.
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