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Markets poised for ‘Super Thursday’

  • Market action muted at start of “Super Thursday”
  • Euro holds $1.1250 ahead of ECB decision
  • S&P 500 futures inch up before Comey testimony
  • Sterling near $1.30 as Britons go to polls
  • Oil prices strive to rebound after sell-off


Hot topic

Activity across financial markets is fairly muted as traders keep their powder dry at the start of what has been dubbed “Super Thursday”: a session containing a trio of perceived risk events.

First up is the European Central Bank, which will release its June policy decision from Tallinn, Estonia at 12:45 BST.
The ECB is expected to leave interest rates and its asset purchase programme unchanged, but traders will be keen to hear how president Mario Draghi reconciles his resolutely dovish stance with continued improvement in the eurozone economy.

The euro, which was volatile on Wednesday, following reports the central bank would trim its inflation forecasts, is down just 4 pips to $1.1250, and benchmark 10-year German Bund yields are adding one basis point to 0.27 per cent. Germany’s Dax index, often sensitive to moves in Bunds and the euro, is up 0.2 per cent, just 1 per cent below the record hit at the end of last week.

Then to Washington D.C, where sacked FBI chief James Comey will begin his testimony to lawmakers at 15:00 BST.

A draft of Mr Comey’s prepared statement has already been released, but investors will want to see if any damaging revelations emerge during questioning that could stoke controversy for the Trump administration and potentially hobble the White House’s mooted pro-growth agenda.

The dollar index, which this week fell to a seven-month low of 96.51 on such concerns and following last Friday’s meek jobs report, is down 0.1 per cent on the day to 96.68. Ten-year Treasury yields are unchanged at 2.18 per cent.

Finally, back across the Atlantic to the UK. Voting in what has become a much tighter than expected general election is now under way, and the first exit polls are expected shortly after 22:00 BST.

The race has proved much tighter than investors expected and there are concerns that an inconclusive result could mean the country’s government have a weaker hand in Brexit negotiations.

Sterling is adding 0.1 per cent to $1.2972, 10-year gilt yields are unchanged at 1.01 per cent and the FTSE 100 equity index is up 0.1 per cent.

What to watch

Oil prices are also in focus after news of a rise in US energy inventories caused crude contracts to fall sharply.

Brent crude, the global benchmark, is up 0.7 per cent at $48.48 a barrel after a 4.1 per cent drop in the previous session that saw it close at a six-month low.

West Texas Intermediate, the US marker, is up 0.8 per cent to $46.09, having lost 5.1 per cent on Wednesday.

Oil has been under pressure of late as investors worry that an Opec and Russian deal to cut output is being counteracted by increased supply from US producers.

Equities

Stock markets are mixed, but again momentum is lacking as traders are wary of making fresh bold bets.

US index futures suggest the S&P 500 will add 1 point to 2,234, leaving the Wall Street barometer just 5 points shy of last Friday’s record closing high.

The pan-European Stoxx 600 is climbing 0.2 per cent as energy groups rebound partially from Wednesday’s sell-off.
“The oil price remains a major driver of equity market performance and yesterday’s late afternoon slump, condemned European indices to a lower close,” noted Ian Williams, strategist at Peel Hunt.

Early gains by Japanese equities quickly disappeared’ leaving the Topix index down 0.4 per cent, following the country’s Cabinet Office unexpectedly revised first-quarter gross domestic product growth downward to 0.3 per cent quarter on quarter, from an initial reading of 0.6 per cent.

In Sydney the S&P/ASX 200 index rose 0.2 per cent, with gains suppressed by a dip in energy stocks, while South Korea’s Kospi index added 0.2 per cent, shrugging off more missile firing by Pyongyang.

Hong Kong’s Hang Seng gained 0.2 per cent while on the mainland the Shanghai Composite added 0.2 per cent.