The S&P 500 closed flat yesterday. Within sectors, Healthcare was the standout performer, gaining 1.1%, while Banks (-1.8%) and Insurers (-1.9%) were hit respectively by lower bond yields and concerns of damage from Hurricane Irma.
10-year US treasury yields moved to a new YTD low during the day yesterday, settling 6bps lower at 2.04%. This move occurred following comments from ECB President Draghi (more below), moves in European bond yields, and a weaker US dollar.
In FX markets, the euro gained 0.9% against the dollar following upbeat comments from Mario Draghi. This marks only the second occasion that the euro closed above the $1.20 level since January 2015.
European equities outperformed their US peers yesterday, with the Euro Stoxx 50 index gaining 0.4%. The German DAX index (+0.7%) also outperformed despite a strong day for the euro.
The key event for the session was the press conference from ECB President Mario Draghi, with primary focus being on any clues on the ECB’s view on recent euro strength.
Draghi commented that the ECB Council view recent moves in the euro as a sign of robust economic fundamentals. The ECB also upgraded this year’s growth forecast from 1.9% to 2.2%.
Asian equities closed lower overnight. Japanese stocks fell 0.6% as all 11 sectors finished in negative territory.
Chinese export growth numbers this morning indicate a slowdown in growth, the second consecutive month of lacklustre export numbers.