The ECB has no reason to increase rates between now and the end of next year
Wall Street stocks finished mostly higher overnight as investors continued to sheer upbeat quarterly earnings after strong results from the first week of earnings. On the negative side, US industrial production fell 1.3%, to its lowest level since February. However, half of the decline was blamed on the effects of Hurricane Ida. As such, the S&P 500 and the Nasdaq gained 0.34% and 0.84%, respectively, while the Dow Jones shed 0.10%.
Today in Asia, equities climbed as risk sentiment remains relatively positive across the markets. Bucking the trend, Sydney’s S&P/ASX 200 shed 0.08% after the RBA’s meeting Minutes showed that the inflation target of 2-3% will not be until 2024. The economy would return to growth in the December quarter and to its pre-delta path in the second half of 2022, the central bank predicted. Meanwhile, the Shanghai Composite in China rose 0.70%, Japan’s Nikkei 225 gained 0.65%, the Hang Seng in Hong Kong added 1.46% while the Kospi in Seoul climbed 0.74%.
European equities opened marginally higher on Tuesday, with the pan-European Stoxx 600 hovering fractionally above the flat-line in early trade. In individual stocks, Ericsson fell 3.5% despite stronger-than-expected third-quarter core earnings. Elsewhere, the ECB Governing Council member Francois Villeroy de Galhau said that there is no reason that bank should increase rates between now and the end of next year. U.S. stock futures were steady in early premarket trading.
In currencies, the dollar retreats across the market, with the USD index challenging new 3-week lows around 93.60 during the European hours. Against this backdrop, EURUSD surged past the 20-DMA to notch October highs around 1.1655 on Tuesday, climbing for the fifth day on a row already. If risk sentiment stays positive in the near term, the pair would preserve gains but a decisive break above the 1.1700 figure looks unlikely at this stage.