GLOBAL MARKETS-Dollar hits 8-day high on Fed talk, European stocks at record peak

  • 8/5/2021
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* U.S. S&P futures up 0.24% * Australian stocks hit record closing high * Oil prices up on rising Middle East tensions LONDON, Aug 5 (Reuters) - The dollar hit eight-day highs on Thursday after hawkish remarks from a senior U.S. Federal Reserve official, while European stocks hit record highs on strong company earnings. U.S. S&P 500 e-mini futures were up 0.24%, indicating a stronger open on Wall Street, after the S&P receded from a record high on Wednesday. Many stock markets around the world have been on a storming run in the past year, boosted by billions of dollars in monetary and fiscal stimulus. Investors are focused on whether some of that stimulus could be rolled back. U.S. Federal Reserve Vice Chair Richard Clarida, a major architect of the Fed’s new policy strategy, said on Wednesday he felt the conditions for raising interest rates could be met by the end of 2022, raising expectations the central bank could scale back its bond-buying programme soon. “It’s a question not of if the Fed taper but how fast the Fed taper,” said Giles Coghlan, chief currency analyst at HYCM, adding he expected tapering of the asset purchase programme to start in August or September. “Clarida has definitely taken a shift.” Clarida’s remarks supported the dollar and U.S. yields. The dollar was steady at 92.200 against an index of currencies after hitting an eight-day high of 92.352. It was flat against the yen at 109.46, while the euro was also little changed at $1.1845. The benchmark 10-year Treasury yield was last at 1.170%, having on Wednesday touched 1.127% - its lowest level since February. European stocks hit record highs, up 0.16%, on strong earnings from Danish diabetes drug maker Novo Nordisk and German industrial firm Siemens. German 10-year bond yields hit their lowest since January and were down 3 basis points at -0.518%, below the European Central Bank’s -0.50% policy rate. UK stocks fell 0.22% and the pound rose 0.25% against the dollar after the Bank of England kept the size of its bond-buying programme unchanged and held its benchmark interest rate at a historic low of 0.1%. “The MPC (Monetary Policy Committee) has chosen to keep the wheels spinning and will wait longer to start putting the brakes on,” said Hinesh Patel, portfolio manager at Quilter Investors. The MSCI world shares index was steady at 729.83, versus a record peak of 731.88 hit on Wednesday. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.29%. The Asian regional benchmark has recovered most of the ground lost a week ago, when a series of Chinese regulatory crackdowns on sectors from property to education squeezed Chinese stocks and overshadowed the region as a whole. The Chinese blue chip index was down 0.61%, weighed primarily by investors dumping online gaming companies, fertilizer producers and e-cigarette makers fearing criticism of these industries in state media could portend more government crackdowns. Australian shares hit a record closing high, led by banking stocks. Japan’s Nikkei climbed 0.52%. Oil prices rose on rising Middle East tensions, though fresh movement restrictions imposed by countries to counter a surge in COVID-19 cases threatened the demand recovery. U.S. crude gained 0.28% to $68.41 a barrel while Brent crude rose 0.28% to $70.57 per barrel. Gold edged up 0.1% to $1,813.40 an ounce. Ether, the world’s second-largest cryptocurrency, dropped 3.8% having gained 8.7% a day earlier ahead of a technical adjustment to its underlying ethereum blockchain, which should happen later on Thursday. Additional reporting by Alun John in Hong Kong; editing by Giles Elgood, Kirsten Donovan Our Standards: The Thomson Reuters Trust Principles.

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