(Bloomberg) — The global stock rally powered by optimism for a speedy economic recovery from the pandemic paused for breath on Thursday as gains fizzled in Europe and Asia. The dollar rebounded from its weakest level since early March.
The Stoxx Europe 600 index opened lower for the first time this week, hours before the European Central Bank announces its policy decision. Futures on the S&P 500 and Nasdaq 100 gauges edged down, after the tech-heavy index grazed a record high Wednesday. Stocks in Asia were mixed, with Australia’s market leading gains while Hong Kong and Shanghai slipped. Treasuries were steady. Australian 10-year yields rose back above 1% for the first time since March.
After exceptional gains for stocks in the past week, investor focus now turns to Frankfurt, where the ECB is expected to boost an already massive monetary stimulus, and to Washington, where U.S. jobs and unemployment data are due. Traders will be looking for further tailwinds for equities and other risk assets that have rallied as economies reopened across the world with little retrenchment.
On the stimulus front, German Chancellor Angela Merkel’s coalition earlier agreed on a sweeping 130 billion-euro ($146 billion) package designed to spur short-term consumer spending and get businesses investing again.
“People are seeing the damage to the economy abate and investors now believe there is light at the end of tunnel,” Susan Schmidt, a portfolio manager at Aviva Investors Americas LLC, said on Bloomberg TV. “We will continue to see support for the stock market.”
Elsewhere, oil declined from a three-month high as OPEC+ unity was threatened by a long-running feud and U.S. data cast doubt on the strength of the demand recovery.
Here are some key events coming up:
The European Central Bank is expected to top up its rescue program with an additional 500 billion euros of asset purchases at a meeting on Thursday. Anything less than an expansion would be a big shock, Bloomberg Economics said.The U.S. labor market report on Friday will probably show American unemployment soared to 19.5% in May, the highest since the 1930s.
These are the main moves in markets:
The Stoxx Europe 600 Index dipped 0.4% as of 8:21 a.m. London time.Nasdaq 100 Index futures sank 0.2%.The MSCI Asia Pacific Index gained 0.1%.The MSCI All-Country World Index fell 0.1%.
The Bloomberg Dollar Spot Index jumped 0.3%.The euro dipped 0.3% to $1.1203.The British pound dipped 0.4% to $1.252.The Japanese yen weakened 0.2% to 109.08 per dollar.
The yield on 10-year Treasuries advanced less than one basis point to 0.75%.Germany’s 10-year yield climbed one basis point to -0.35%.Britain’s 10-year yield fell one basis point to 0.269%.Australia’s 10-year yield increased five basis points to 1.0295%.
West Texas Intermediate crude fell 2.1% to $36.49 a barrel.Gold strengthened 0.1% to $1,701.57 an ounce.LME nickel dipped 2.5% to $12,550 per metric ton.
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