UK and Europe
European stocks were mixed on Wednesday as European Commission president Jean-Clause Juncker made his state of the union speech and Germany’s Bayer (DE:BAYGN) confirmed its take-over of US seeds giant Monsanto (NYSE:MON).
Volatility has come down ahead of the Bank of England’s policy decision today. There’s a general sense that, even if central banks try to do more, they are pushing on a string in efforts to support global growth. The wobble in the bond market is unlikely to be the end of a 30-year bull market, but is giving investors pause for thought on when the bubble will burst.
The FTSE 100 was up by around half-a-percent by mid-morning yesterday, amid positive economic data and a rise in insurance and mining company shares. Glencore (LON:GLEN) led a rise in the basic resource sector after data showed money supply and bank loan growth in China.
There was no read-across from the record profits and dividend hike at Galliford Try (LON:GFRD) to the rest of the homebuilding sector. Shares of Taylor Wimpey (LON:TW) and Persimmon (LON:PSN) were sitting near the bottom of the UK bluechip index.
Shares of German pharmaceutical firm Bayer were higher on the confirmation of its purchase of US seeds company Monsanto. It later gave up around half of the gains amid a mixed reaction to both the price and the concept of the deal. The deal puts an enlarged Bayer/Monsanto combination in a better position to take on the competition from recently combined Chem China/Syngenta and DuPont/Dow Chemical.
US
US stocks opened on a firmer footing on Wednesday following Tuesday’s rout, helped by a 3% gain in Apple's (NASDAQ:AAPL) share price on renewed optimism towards the controversial headphone socket-less iPhone 7.
Shares of Herbalife (NYSE:HLF) had a higher open following Carl Icahn’s suggestion that the company accused of being a pyramid scheme by fellow hedge fund manager Bill Ackman would be “better off private.”
FX
The British pound dropped on Wednesday as investors sold it down ahead of Thursday’s Bank of England decision. The losses erased an initially warm reaction to UK labour market data. There was a slight rise in benefit claims, but the steady unemployment rate and earnings growth is a far cry from any kind of huge Brexit-induced fallout.
Chances are pretty slim that the Bank of England will double down on last month’s stimulus following generally robust UK economic data between the meetings. The BOE statement and minutes are likely to pretty closely resemble Governor Carney testimony at the inflation hearings only last week.
Commodities
The price of oil erased early gains as traders resumed bearish bets on speculation that Libya will soon be in a position to begin exports again. The losses come after the American Petroleum Institute reported a build in weekly oil inventories. The price did have a brief rally after DOE data showed a surprise draw, but within half-an-hour of the data made new lows of the day. All indications are that the biggest drawdown in 17 years seen in last week’s inventory figures was an aberration.
The price of gold erased early losses in attempt to make its first daily gain in six. The blackout in Fed speakers before the US rate decision next week will give gold a little chance to recover after being battered by hawkish comments.
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