European equities rose to near all-time highs on Wednesday before paring early gains. Earlier in the day, ECB’s Panetta said it was clearly premature to discuss any paring of emergency asset buying in the Eurozone even though the economic outlook is improving. On Tuesday, Fed Vice Chair Richard Clarida said the central bank would be able to manage an overshoot in inflation without derailing the country’s economic recovery, while San Francisco Federal Reserve President Mary Daly highlighted that while the recovery so far is encouraging, it is way too early to tighten policy. Dovish comments from major central banks helped to further ease inflation concerns among investors.
In individual stocks, shares of Marks & Spencer climbed 4.5% after the retailer said its business was ahead of a two-year-earlier comparative for the first six weeks of fiscal 2022. The company also swung to a pretax loss for fiscal 2021 on lower revenue.
Elsewhere, China's banking regulator has asked lenders to stop selling investment products linked to commodities futures to "mom-and-pop" buyers in order to curb investment losses associated with such products amid volatile prices.
Against this backdrop, the UK FTSE 100 sheds 0.03% to 7,027, Italy’s FTSE MIB loses 0.05% to 24,880, France’s CAC 40 is up by 0.25% to 6,406, while the German DAX 30 rises by 0.09% to 15,480. US stock index futures are pointing higher ahead of the opening bell on Wall Street. Market players are now awaiting a speech from Federal Reserve Vice Chair Randal Quarles later today.
In currencies, the dollar looks mixed, attempting to pare some of its recent losses while US 10-yer Treasury yields keep navigating below the 1.60% figure. The USD index bounced from fresh monthly lows in the mid-89.00s and posts decent gains in the 89.70 zone during the European hours. However, the index remains under pressure in a wider picture and could see deeper losses in the coming days.
Oil prices edged higher on Wednesday, extending gains to the $69 figure that triggered a local retreat early in Europe. Brent crude continues to trend upwards despite the fact that market focus shifts to talks aimed at reviving the Iran nuclear deal. Overnight, the API reported a draw in crude oil inventories of 439,000 barrels for the week ending May 21. The data also pointed to a decline in gasoline inventories of 1.986 million barrels while distillate stocks saw a decrease in inventories of 5.137 million barrels for the week. Later today, the EIA reveals its official estimate. If the report reflects bullish figures as well, oil prices could receive an extra boost in the short term.
Nathan Lambert, Head of Global FX Analytical Department