Nord Stream pipeline is scheduled to reopen following maintenance
Wall Street stocks rallied on Tuesday, extending a pullback from last month’s lows as investors cheered the latest round of earnings reports. Major banks jumped overnight, with Goldman Sachs adding more than 5.5% while Wells Fargo advanced 4.2%. Against this backdrop, market participants shrugged off a weaker-than-expected print in US housing starts, which fell 2% in June. As such, the Dow Jones Industrial Average jumped 2.43%, the S&P 500 gained 2.76% and the Nasdaq Composite rose 3.11%. Wall Street saw its best day in more than three weeks.
Following suit, Asian equities were up on Wednesday. The Shanghai Composite index rose 0.77% after China’s central bank kept its loan prime rate unchanged despite the latest data showing a significant slowdown in growth. Nikkei 225 in Tokyo rallied 2.67% ahead of the Bank of Japan’s meeting due on Thursday. The central bank is expected to lift its inflation forecast for fiscal 2022 from the current 1.9% to 2% or higher. Elsewhere, South Korea’s Kospi advanced 0.67% and Australia’s S&P/ASX 200 added 1.65%.
In Europe, stocks opened higher on Wednesday, with gains looking modest as the buying interest across the globe seems to be waning. On the positive side, Gazprom is poised to restart gas exports to Europe on Thursday at reduced capacity through its Nord Stream pipeline which is scheduled to reopen following maintenance. The pan-European Stoxx 600 added 0.4% in early trade, with investors shifting their focus towards the European Central Bank’s policy meeting on Thursday.
Meanwhile, the dollar stays pressured for the fifth session in a row as safe-haven demand waned amid positive risk sentiment. The USD index fell to two-week lows around 106.40 in early European deals, with risks remaining skewed to the downside in the near term. However, should the ECB fail to inspire euro bulls on Thursday, the greenback may see a reversal after a solid downside correction. EURUSD is now flirting with the descending 20-DMA, currently at 1.0280, that has been acting as resistance for more than a month already. A decisive break above this barrier would further improve the near-term technical picture.