GLOBAL MARKETS-Europe and Wall Street strain for gains, dollar holds ground

  • 8/12/2021
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(Updates ahead of Wall Street opening bell) LONDON, Aug 12 (Reuters) - European stocks were attempting to equal their longest winning streak since 2017 on Thursday, while the dollar and bond yields took a breather after U.S. inflation and unemployment data cooled talk of rapid Federal Reserve stimulus withdrawal. Asian stocks had suffered more Chinese jitters overnight after state media reported online insurance companies would come under tougher scrutiny, but this wasn’t going to stop either Wall Street or Europe’s impressive runs. Insurers Aegon, Aviva and Zurich helped Europe to a ninth straight record high with upbeat results and payouts, while signs of life in the holiday market helped TUI shares claw back 1% of the 50% they have lost during the COVID-19 pandemic. On the macro front, there was another dip in weekly U.S. jobless claims, and Britain’s economy grew by a faster-than expected 1% in June. “These figures knock fears over the impact of the Delta variant on the head,” said Steve Clayton, a fund manager at Hargreaves Lansdown. “Consumers are continuing to spend, regardless.” Turkey’s lira zipped higher as its central bank resisted pressure to cut its 19% interest rates for another month. Zambia was heading to the polls and news Lionel Messi’s new PSG contract included some digital tokens excited the cryptonites. Otherwise activity was still about Wednesday’s U.S. consumer price inflation data, where a widely forecast slowdown in the pace of rises took some heat out of speculation over when the Federal Reserve might taper its massive bond buying programme. Treasury yields had jolted down to nearly 1.30% but then bounced back to 1.34% and were nudging 1.36% as U.S. trading began. Germany’s 10-year yield was up a fraction to -0.455% , which kept the gap with Treasuries near a two-month wide. In the FX market, the dollar was still near a four-month peak against major peers after it, too, had retreated after the inflation data. “That makes it more likely that inflation will ease back to the 2% target by itself and less likely that the Fed will have to hike interest rates more aggressively than so far assumed,” currency analysts at Commerzbank said in a note. Producer price data released ahead of the Wall Street bell then confirmed the trend. BEARS IN THE CHINA SHOP There are plenty of U.S. earnings due later. Walt Disney will report along with Airbnb, Doordash and Chinese internet giant Baidu, whose U.S.-listed shares have more than halved since February as Beijing makes sweeping regulatory changes. Weekly Labor Department figures showed the number of Americans filing claims for unemployment benefits fell last week, a sign that the economic recovery from the COVID-19 pandemic continues to gather momentum. Asian shares had dropped again overnight, dragged down by a 0.8% fall in Chinese blue chips and a 0.5% drop in Hong Kong as weaker-than-expected China lending data triggered liquidity concerns. Among the biggest sliders was Chinese online insurer ZhongAn , which fell 11.5% after state media said China’s banking and insurance regulator would step up scrutiny of online insurance companies. Nervous traders have been quick to respond to remarks from Chinese state media and officials, after many were surprised by last month"s tougher-than-expected new rules for the private tutoring sector here, one of several regulatory crackdowns that have roiled sectors from technology to property here. Whereas the main all-world stock indexes have been hitting regular record highs, MSCI’s main Asian benchmark is now down more than 10% from its February peak. Some Chinese stocks have lost nearly 90%. “The money is just in the U.S. and European markets right now, and that’s our preferred market too,” said Daniel Lam, senior cross-asset strategist, Standard Chartered Wealth Management. In commodity markets, oil largely held on to gains from earlier in the week with U.S. crude dipping 0.03% to $69.23 a barrel. Brent crude was flat at $71.43 per barrel. U.S. President Joe Biden’s administration on Wednesday had urged the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery. Gold also held on to overnight gains, with the spot price up fractionally at $1,756 an ounce having risen 1.3% in the previous session. Easing fears about higher interest rates typically help the non-interest bearing asset.

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