World stocks hit new record highs on Tuesday amid a continuation of Monday’s risk-on theme which unleashed a dramatic relief rally on easing North Korea tensions and signs that Hurricane Irma caused less damage than feared. The MSCI All-Country World Index gained 0.2%, hitting the highest on record with a fifth consecutive advance.
European equities headed for the longest winning streak in five months while S&P 500 futures extended on Monday’s record high, pointing to another all-time high open. Meanwhile, the dollar struggled to build on a strong start to the week as concerns about lackluster inflation lingered before key U.S. data.
Europe’s Stoxx 600 Index gained for a fifth day, the longest run since April, up 0.6% hitting the highest level in 5 weeks, as the technology sector joined in the rally ahead of Apple iPhone unveiling later on Tuesday. Chip makers STMicroelectronics N.V. and Infineon Technologies AG were among big gainers, while the insurer index gained a further 0.3%, as insured property losses from Hurricane Irma’s are expected to be smaller than initially forecast.
British consumer price inflation came in stronger than expected at 2.9 percent, offering more clues as to the Bank of England’s policy decision on Thursday, and sending the pound to the highest level against the USD, as cable rose as high as 1.328. The BOE has been struggling to keep inflation at 2 percent since Sterling tumbled in response to Britain voting to leave the European Union in June 2016, pressure on consumer spending and living standards.
The dollar failed to maintain momentum after Monday’s 0.6 percent gain, with market focus turning to whether U.S. consumer-price data due Thursday has the potential to improve the greenback’s allure. The Bloomberg Dollar Spot Index swung between gains and losses as investors unwound their risk-off positions, while the pound rallied on the back of faster-than-estimated U.K. inflation. Sterling rose to $1.3282, its highest level in a year, as data showed annual core inflation in Britain accelerated to 2.7 percent in August, the most since 2011. Profit-taking in euro-pound longs also helped cable push above the August highs, according to currency traders in Europe and London.
In commodities, WTI and Brent saw some bearish pressure, as bulls failed to test yesterday’s high. Fundamentally, US refineries are restarting following the shutdowns caused by Hurricane Harvey; however, with restarts historically dangerous, operators did keep the shutdowns to a minimum. Precious metals continue to highlight metal markets, as the risk tone has picked up this week, they fail to fill Monday’s gap could be an indication of a strong bearish trend in Gold, which trades back within August’s range. OPEC figures show that the cartel’s August output has fallen to 30mln bpd, according to sources.
On today’s calendar, there is the NFIB small business confidence reading and July JOLTS job openings. Away from the data, China Premier Li Keqiang will host an economic roundtable in Beijing that will include heads of IMF, the World Bank, and WTO. In more equities related news, the highly anticipated declaration of the newest iPhone is being released which will surely send stocks, particularly chip makers, through the roof.
The Bloomberg Dollar Spot Index swung between gains and losses as investors unwound their risk-off positions, while the pound rallied on the back of faster-than-estimated U.K. inflation growth.
GBPUSD – Sterling rose to 1.3282, its highest level in a year as data showed annual core inflation in Britain accelerated to 2.7% in August, the most since 2011. Profit-taking in euro-pound longs also helped cable push above the August highs.
USDJPY – The Yen falls versus G-10 bloc as investors extend unwinding of long positions that were initiated on a risk-off basis last week. USDJPY gained as much as 0.3% to 109.76, one week high.
EURUSD – The euro pared some of its gains as it traded 0.1% higher at 1.1961 as of 10:55 am in London. Large bids seen within 1.1900-20 as mic of names look to fade any further dips in the common currency.
AUDUSD – The choppiness of the currency pair is very evident as going up and down during the day to settle around the open of today effectively trading in a Doji pattern which symbolizes indecision amongst the investors.
USDCAD – Breaking below the 1.2100 for the first time in 2 years, the pair seems to be trading close to the support level which leads more investors to wonder when the next break will happen.
Dow Jones – More positive momentum on the index as it reaches above the 22100. The pace at which the Dow Jones as escalated has given more investors a good sense that all is well in the U.S.