(A look at the day ahead from EMEA deputy markets editor Sujata Rao. The views expressed are her own.)
A strong performance today from trade-exposed Korean stocks and currency. But we also see a rally to eight-year highs by gold, that classic safe-haven asset. Stock markets are stalling but safe-haven German and U.S. bonds are being sold, too.
Perhaps a reflection of the counteracting forces in the market?
First, good news – PMIs clearly show the pace of economic contraction is slowing. U.S. Treasury Secretary Steven Mnuchin said he may further delay tax-filing deadlines and White House adviser Larry Kudlow said tax rebates and direct-mail checks are on the table in the next relief bill.
Assurance also came from the New Zealand central bank it would ease policy further if necessary.
On the downside, Bank of Japan board members said the BOJ should examine the stimulus put in place since March – echoing signals from elsewhere that enough has been done for now. On COVID, Australia posted its first COVID-19 death in over a month. Overall, the coronavirus toll is marching relentlessly higher, killing 100,000 people in Latin America and record new infections in Arizona, Florida and Texas.
In the UK, PM Boris Johnson’s decision to cut the two-meter distancing rule to one meter could raise infection risks 10-fold, some scientists warned.
European shares are 0.6% lower, while US futures are flat to negative. The dollar index is down just above one-week lows. The New Zealand dollar is down 0.3% while the euro is enjoying its best week since October.
As for sterling, it’s four years since the fateful Brexit vote. The pound is near one-week highs today but has weakened some 18% versus the dollar since June 2016 and lost almost 20% against the euro.
Bond markets are looking to Austria’s new 100-year bond, which will raise 2 billion euros, while Germany will re-open a 15-year bond expected to raise 2.5 billion euros.
In European corporate news, NetEnt shares are seen up 40% as Evolution Gaming offers to buy it for 19.6 bln Swedish crowns; Volkswagen explores acquiring car-rental group Europcar, while the Benetton family has been approached for their 3.4 billion-euro stake in Cellnex.
Elsewhere, Japan’s Olympus Corp plans to sell its camera business to Japan Industrial Partners and Dell is spinning off a stake in software maker VMWare.
There are share sales, too – SoftBank Group is divesting some shares in wireless carrier T-Mobile, pricing them at $103 each; Russia’s Yandex is to raise $800 million from a share issue.
The latest on the coronavirus hit at European companies: Swiss duty free retailer Dufry will reduce staff by 20% to 30% this year and French unions see 350 jobs at risk at Airbus
Dutch insurer NN Group expects an impact of about 100 million euros on operating profit
Singapore’s Grab puts on hold a partnership with stricken Wirecard.
In emerging markets, stocks seem determined to look past risks, hitting three-and-a-half-month highs, up nearly 10% since early June.
Index firm MSCI warned Turkey it may begin consultations on kicking it out of its emerging equity index, citing deteriorating accessibility and a recent short-selling bans.
In South Africa, Finance Minister Tito Mboweni will present an emergency budget at 1300 GMT.
Some central bank action — the Thai baht firmed after interest rates were held steady; Turkey’s lira flat before an expected rate cut on Thursday and Hungary’s forint weakened for a sixth straight session after a surprise rate cut. Czech rates should hold at 0.25% later on Wednesday.
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