Euro hits six-week low as Catalan secession fears push down Spanish stocks and bonds © AP
Tuesday 14:00 BST
What you need to know
- Euro bounces up off six-week low as Catalonia crisis shadows sentiment
- Sovereign bond yields rise on eurozone periphery
- Bourses steady after set of Wall Street records
- S&P 500 and Dow expected to extend gains in opening trade
- Opec production lift hits oil price
- US dollar sentiment holds on Trump’s tax package
Leading quote
“The Catalan developments are something we continue to watch closely, and the UK Conservative party conference will be important for the mood surrounding Brexit negotiations and eurozone stability,” says Nandini Ramakrishnan, global market strategist at JPMorgan Asset Management.
“We continue to encourage investors to look at the fundamentals in times of uncertainty. Global corporates are delivering almost 10 per cent year-on-year earnings growth based on the synchronised global growth picture. As such, we monitor purchasing managers’ indices this week . . . retail sales and US jobs data.”
Hot topic
The euro is inching up off a six-week low and government bonds remain under pressure on the periphery of the eurozone as the crisis surrounding the vote for independence in Catalonia continues to unsettle investors.
But Wall Street’s record-breaking run is helping keep pressure off European stocks, which are trading steadily, even in Madrid.
The shared currency is up 0.1 per cent at $1.1747, having been down as much as 0.3 per cent to a day-low of $1.1694 its lowest point since August 17.
Spain’s benchmark 10-year government bonds remain under pressure, sending yields higher by 5.3 basis points to 1.739 per cent, the highest since July. Elsewhere on the periphery of the eurozone, Portugal’s 10-year yield is up marginally at 2.42 per cent, while Italy’s is up 4.3bp at 2.5 per cent.
Germany’s 10-year debt yield is flat at 0.46 per cent.
Equities
European equities holding firm after New York’s record-breaking run offset the sense of caution over Catalonia. All the main US equities indices set closing highs overnight. The S&P 500 and the Dow Jones Industrial Average are expected to rise further in opening US trade
In the meantime, the region-wide Euro Stoxx 600 is flat, London’s FTSE 100 is up 0.1 per cent. Spain’s main stock index, the Ibex 35, is underperforming slightly with a 0.2 per cent dip. Frankfurt’s stock market is closed for a public holiday celebrating German reunification.
Hong Kong’s Hang Seng index came back from a long weekend with a 1.7 per cent rally — one of its best sessions in 18 months — helped by advancing financial stocks after China’s central bank reduced reserve ratio requirements, a move that often stimulates lending.
The Topix in Tokyo is up 0.7 per cent, taking it to a two-year high.
Currencies
The dollar index, measuring the greenback against a basket of peers, is up 0.1 per cent at 93.62.
The Japanese yen, which lost appeal as a haven following positive Japanese economic data on Monday, is 0.2 per cent weaker at ¥113.0 per dollar. The Australian dollar is down 0.2 per cent at $0.7806 after the country’s central bank held interest rates at 1.5 per cent for the 14th straight month.
The pound is down 0.2 per cent at $1.3250, heading under the flatline after a surprise contraction in the UK’s purchasing managers’ index for the construction sector, the first in more than a year. Against the euro, the pound is 0.3 per cent weaker at £0.8866.
Commodities
Brent crude, the international benchmark, is down 0.7 per cent at $55.74 a barrel while West Texas Intermediate, the main US marker, is down 0.6 per cent at $50.26.
Higher oil output from Opec producers in September is limiting prices, while the strengthening dollar is also having an impact.
Gold is flat at $1,270.46 an ounce.
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