LONDON – European stocks were attempting to equal their longest winning streak since 2017 on Thursday, while the dollar and bond yields took a breather after US inflation data cooled talk of a rapid reeling-in of Federal Reserve stimulus.
On the macro front, Britain’s economy grew by a faster-than expected 1 percent in June. The food and beverage services sector surged more than 10 percent as the economy continued to reopen. It also meant UK GDP rose by 4.8 percent year-on-year in Q2.
“These figures knock fears over the impact of the Delta variant on the head,” said Steve Clayton, a fund manager at Hargreaves Lansdown. “Consumers are continuing to spend, regardless.”
Otherwise it was still about Wednesday’s US consumer price inflation data, where a widely forecast slowdown in the pace of rises had taken some heat out of speculation over when the Federal Reserve might taper its massive bond buying programme.
Treasury yields had jolted down to nearly 1.30 percent but then bounced back to 1.34 percent and were broadly steady in European trading.
Germany’s 10-year yield was down by half a basis point at -0.465 percent which kept the gap with Treasuries near a two-month wide.
In the FX market, the dollar was still near a four-month peak against major peers after it, too, had retreated after the inflation data.
“That makes it more likely that inflation will ease back to the 2 percent target by itself and less likely that the Fed will have to hike interest rates more aggressively than so far assumed,” currency analysts at Commerzbank said in a note, adding producer price data due later on Thursday was likely to confirm the trend.
There are plenty of US earnings due later. Walt Disney will report along with Airbnb, Doordash and Chinese internet giant Baidu,.
The main all-world stocks indicies have been hitting regular record highs, MSCI’s main Asian benchmark is now down over 10 percent from its February peak.
“The money is just in the US and European markets right now, and that’s our preferred market too,” said Daniel Lam, senior cross-asset strategist, Standard Chartered Wealth Management.
In the commodity markets, oil largely held on to gains from earlier in the week, US crude dipped 0.03 percent to US$69.23 a barrel. Brent crude was flat at US$71.43 per barrel.
US President Joe Biden’s administration on Wednesday had urged the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery.
Gold also held on to overnight gains, with the spot price up fractionally at US$1,756 an ounce having risen 1.3 percent in the previous session. Easing fears about higher interest rates would typically help the non-interest bearing asset.