Equities: upbeat sentiment in Europe, spurred by the start of a rebound by Chinese indices. The Stoxx 600 was up 0.4% at Thursday’s close. Energy and financials were out in front, while defensives (health, utilities, telecoms) were down slightly. The FTSE MIB (+1%) and FTSE (+0.8%) outperformed in Europe. In the US, the typically goldilocks macro news flow (good but not too good) is supporting equities: the S&P500 was up 0.4% Thursday evening, still near its all-time highs. The VIX closed at 17.7. On the US earnings front, halfway through the results published in the S&P500 universe, the percentage of positive surprises is very high at 87% for EPS (average surprise of 18%) and 83% for sales.
FX: the US dollar fell yesterday against most G10 currencies after the FOMC Statement. As a result, the DXY dollar index declined by 0.45%, pulling back below 92.00. The EUR/USD appreciated by 0.39% to 1.1888, benefiting from a weak dollar and the release of upbeat German unemployment figures. On the other hand, concerns over the Delta variant saw the Swiss franc strengthen against the euro, while the single currency weakened for the fourth consecutive session against sterling. Commodity currencies ‑ Norwegian krone, New Zealand, Australian and Canadian dollars ‑ appreciated against the greenback (rising by 0.70% on average) on the back of the rise in the price of Brent. Turning to emerging currencies, they all appreciated against the greenback in Asia, Latin America and the EMEA.
Commodities: in a bid to cool down prices, China auctioned off 170,000 tonnes of base metals. Initial reports suggest that a bigger discount was applied than at the last auction which took place earlier in the month. Looking at aluminium, prices rose to a three-week high due to supply issues. Rio Tinto cut production at a site in Canada due to a strike; meanwhile Henan Shenhu announced that it would be missing its annual aluminium production target due to electricity rationing.
Asia overnight: In Asian hours risk sentiment was unstable with US stock futures trading lower at the time of writing. This is partly in reaction to the most recent US earnings releases disappointing. In the bigger scheme of things, however, market impact was limited and so much is well reflected in G10 FX trading in narrow ranges. If anything, the NOK has been among the underperformers. However, from the current levels downside should prove limited with well supported central bank rate expectations expected to put a floor below the currency.