Stocks, oil dip, but mar­kets calm down as growth fears ease

The Pak Banker - - MAR­KETS/SPORTS -

Euro­pean stocks and oil prices fell on Thurs­day but still held on to most of this week's gains, as con­cern eased about the global out­look for eco­nomic growth.

Up­beat data from ma­jor economies this week and signs of a re­bound in com­mod­ity prices have helped re­store some calm to global mar­kets af­ter a tur­bu­lent start to the year. Growth in Ger­many's pri­vate sec­tor slid to a five-month low in Fe­bru­ary but re­mained solid, un­der­pinned by grow­ing ser­vices, a sur­vey showed on Thurs­day.

Euro­pean stock mar­kets fell at the open but re­mained close to two-month highs, re­flect­ing a more up­beat mood among in­vestors. Oil prices re­versed ear­lier gains as swelling U.S. crude in­ven­to­ries out­weighed a grow­ing be­lief that the mar­ket's 20-month-long rout is end­ing.

Brent crude prices LCOc1 slipped 0.9 per­cent to $36.63 but are still some 35 per­cent above last month's lows. U.S. crude fu­tures lost 0.4 per­cent to $34.51 CLc1. How­ever, they have risen more than a third since Feb. 11, when prices dropped to lev­els not seen since 2003 at just over $26 a bar­rel.

The pan-Euro­pean FTSEurofirst 300 was down 0.46 per­cent, with blue-chip stocks in Lon­don .FTSE, Paris .FCHI and Frank­furt .GDAXI all los­ing ground. That fol­lowed a strong ses­sion in Asia, where MSCI's broad­est in­dex of Asia-Pa­cific shares out­side Ja­pan .MI­APJ0000­PUS added an­other 1.1 per­cent to reach a two-month peak.

Fo­cus turned to the U.S. non-man­u­fac­tur­ing ISM re­port, due later on Thurs­day, with in­vestors eye­ing the em­ploy­ment com­po­nent for clues about Fri­day's non-farm pay­rolls re­port. A solid re­port on Fri­day could bol­ster ex­pec­ta­tions that the Fed­eral Re­serve re­mains on track to raise in­ter­est rates this year and boost the dol­lar.

The dol­lar was back above 114.00 yen JPY=, up 0.5 per­cent at 114.05 and mov­ing to­wards the pre­vi­ous day's two-week high of 114.56. Even the low-yield­ing euro was up 0.6 per­cent at 123.95 yen EU­R­JPY=.

"We are see­ing bet­ter risk ap­petite weigh­ing on the yen," said Niels Chris­tensen, FX strate­gist at Nordea. "The fo­cus is on the ISM re­port, and if, like the man­u­fac­tur­ing sur­vey, it is a good one, then we could see the dol­lar move higher."

Data on Wed­nes­day showed U.S. pri­vate­sec­tor jobs ris­ing a sur­pris­ingly strong 214,000 in Fe­bru­ary, adding to spec­u­la­tion Fri­day's pay­rolls re­port would also be up­beat.

The calmer mood in world mar­kets showed in the CBOE Vo­latil­ity in­dex .VIX, a mea­sure of in­vestor anx­i­ety, which closed at its low­est level so far this year.

Against this back­drop, U.S. Trea­sury and Ger­man Bund yields have pulled away from lows hit in Fe­bru­ary as greater risk ap­petite lessens the ap­peal of safe-haven bonds.

The Aus­tralian dol­lar was up 0.2 per­cent to $0.7303 AUD=D4 af­ter ear­lier reach­ing a 2016 high of $0.7325. Data showed Aus­tralia's fourth-quar­ter eco­nomic growth un­ex­pect­edly picked up to an an­nual 3.0 per­cent.

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