Global Stocks Hit 4 Month High As US Futures Drop Ahead Of Fed Minutes; Yuan Soars
World stocks hit a four-month high on - what else - hopes of progress in trade talks between the United States and China, even as US equity futures drifted lower, offsetting a rise in European and Asian stocks as traders awaited the release of minutes from the latest Fed meeting. The dollar snapped a 4-day losing streak while the yuan jumped after a Bloomberg report that Trump is asking China to keep its currency stable (and hence less market-determined).
The bullish mood was boosted after Donald Trump said negotiations with China were going well and suggested he was open to extending the deadline to complete them beyond March 1 which is anything but "magical."
European automakers led an advance in the Stoxx 600 Index, which erased Tuesday’s drop, even as miner Glencore fell on lower-than-expected earnings, while Lloyds rose after it unveiled a 1.75 billion pounds ($2.3 billion) buyback plan. UK. grocer J Sainsbury plunged on antitrust objections to its planned takeover of Walmart’s Asda.
Meanwhile, European banks continued to be pressured by expectations that the ECB will restart a program to provide long-term cheap loans, or TLTROs, to banks to boost a faltering economy, depressing yields, while on Monday the BOJ flagged its readiness to ease further.
Earlier, the MSCI index of Asia-Pacific ex-Japan rose as much as 1.1% to mark its highest levels since Oct. 2. Hong Kong’s Hang Seng gained as much as 1.3 percent to six-month highs, while Korea’s Kospi and Taiwan’s index recovered to levels last seen in early October. Japan’s Nikkei added 0.6 percent to two-month highs.
Boosted by fresh dovish sentiment, emerging-market stocks and currencies jumped the most in three weeks amid optimism that trade negotiations between Washington and Beijing will lead to a deal. The South African rand and Turkish lira bucked the rally.
The yuan led the advance among developing markets, bolstering its Asian peers, after Bloomberg reported that the U.S. is asking China to keep the value of its currency stable as part of the negotiations. The onshore Yuan strengthened as much as 439 pips on Wed to close at 6.7236/USD, its biggest intra-day gain in more than a month, and the highest since the end of Jan, and the biggest rise since Jan 10th. The offshore yuan was last trading at 6.7265 after rising as high as 7.164.
And speaking of China's currency, Premier Li said that China has not and will not change monetary policy; will not resort to 'flood-like' stimulus. RRR cut in January reflected that there is sufficient room for cuts, adding that increasing bill financing and short-term loans may create the potential for risks.
Elsewhere in FX, the dollar snapped a four-day losing streak before the release of Fed January minutes, rising 0.2 percent against the yen after Japan recorded its biggest annual drop in exports in January for more than two years, and on recent dovish Bank of Japan signals.
The pound slipped as Prime Minister Theresa May headed back to Brussels in a last-ditch attempt to save her Brexit deal and as three Conservatives quit to join a new party, while the euro lacked a clear sense of direction after ECB’s Praet said a decision on TLTROs may not be made at the March meeting. The rand dropped before Finance Minister Tito Mboweni’s budget speech on Wednesday.
In rates, European bonds mostly edged up, but Italian notes fell while US Treasuries were unchanged after some mixed trading earlier.
https://www.zerohedge.com/news/2019-02-20/global-stocks-hit-4-month-high-us-futures-drop-ahead-fed-minutes-yuan-soars
https://www.bloomberg.com/markets/stocks/futures
https://www.kitco.com/charts/livegold.html