Global Equities Lower As US Bond Yields Hit 3%
Not even news of a $64 million takeover of Shire and a potential takeover war for Sky was enough to lift the FTSE, which fell throughout Wednesday’s session. Rising US bond yields, crossing the 3% barrier for a second time in as many days, were once again to blame for dampening demand for equities, despite stellar US earnings.
Twitter whipsaws on results
Twitter (NYSE:TWTR) is seen reaping the rewards of its more recent push into live video and more personalised content, luring more users and advertisers, which bolstered revenue and profits. Sales jumped 21%, the biggest increase in two years to $664.9 million, whilst active monthly users rose to 336 million an increase of 6 million from the previous period and ahead of analysts forecasts. Yet despite the solid figures Twitter gave a more cautious outlook causing a whipsawing in the share price, from an initial 14% rally in early trade, to a 5% decline at the time of writing.
Commodity stocks & Shire Largs FTSE
Commodity stocks dominated the FTSE loser board with Anglo American (LON:AAL) extending losses from the previous session by an additional 5%. Oil majors were also under pressure tracing the price of oil lower. Shire also added to the negativity, trading down 2.5% after accepting a $64 million takeover by Japanese peer Takeda at the fifth time of asking.
EUR/USD to $1.21 on dovish Draghi?
As US bond yields continued to press higher EUR/USD came under increasing pressure, tumbling through $1.22 ahead of the ECB policy decision tomorrow. With weaker economic data, softer inflation and increased global tensions over a potential trade war since the last meeting, we would expect the ECB’s Draghi to sound more dovish at the pursuing press conference. No changes are expected to policy and the ECB are unlikely to give any clues as to the ending of the current bond buying programme, until at least June if not July. Policy makers will want to have more time to judge the slowdown in the eurozone economy. A more dovish sounding Draghi could see the EUR/USD fall to $1.21.
GBP/USD slips further ahead of Friday’s GDP reading
GBP/USD was another victim of the stronger dollar, falling further away from the psychological level of $1.40 ahead of Friday’s all important growth figures. After the hat-trick of disappointing numbers last week and a more dovish sounding BoE, a weaker than forecast Q1 GDP on Friday would put to bed any remaining optimism of a May rate hike.
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