US stocks resumed their upward momentum yesterday as the S&P 500 rose 0.7%, led higher by gains in Energy stocks.
US bond markets were calmer yesterday as reports that Chinese government officials recommended buying less US debt were deemed to have been misinterpreted. The yield on 10-year government bonds traded 1bp lower (prices rose).
Oil prices continued to rise, buoyed further by a weaker dollar. Brent crude prices rose 0.1%, settling at their highest level in 3 years.
Attention today turns to corporate earnings, with JP Morgan, Blackrock, and Wells Fargo scheduled to release numbers.
US inflation data will also command attention for the session ahead, with price pressures expected to remain muted.
European equities underperformed their US peers yesterday as the strong euro weighed. The Euro Stoxx 50 index fell 0.4%, German equities fell 0.6% and French stocks closed 0.3% lower.
The euro gained 0.7% against the dollar, settling back above the $1.20 level, following the release of minutes from the ECB’s December meeting which were deemed to be hawkish. The minutes highlighted that the ECB was planning to revisit its forward guidance early this year, sooner than many had expected.
European government bond yields traded higher (prices fell) following the release of the ECB meeting minutes – 10-year German yields jumped 5bps to 0.58%, their highest level since July 2017.
Markets were mixed in Asia overnight. Japanese stocks closed marginally lower, falling 0.2%, with Consumer Staples and Telecoms contributing the most losses.