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LONDON (Reuters) – Shares, oil prices and currencies held steady on Wednesday as investors saw few reasons to trade ahead of the release of the Federal Reserve’s July meeting minutes, which could offer clues about when it will start tapering its bond purchases.
European shares hovered near flat with the benchmark STOXX index rising 0.05% after MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.43%, still only a little above year-to-date lows.
Oil also recovered slightly after four straight days of declines as investor concerns eased over demand for fuel while COVID-19 keeps spreading, with Brent crude up 70 cents or 1.14% at $69.82 a barrel.
The dollar held near a 4-1/2 month high versus a basket of major currencies as investors sought safe havens, weighing up signs of global economic recovery against concerns about rising cases of the Delta variant of the virus.
“We actually think some of the fears about the Delta, especially in Europe, might actually be overdone, especially as countries like Germany or France have been catching up in terms of vaccination rates,” said Matthias Scheiber, Head of Multi-Asset Solutions at Wells Fargo (NYSE:WFC) Asset Management
U.S. stock markets looked set for a sluggish open with S&P 500 futures down 0.08%, following a Wall Street slump on Tuesday on weak retail sales.
The South Korean won led gains among Asian currencies after a six-day hammering prompted the finance ministry to monitor the currency market more closely.
The New Zealand dollar recouped losses made after the Reserve Bank of New Zealand delayed a widely expected rise in interest rates as the country was put into a snap COVID-19 lockdown.
The kiwi fell to a nine-month low of $0.6868 after the decision but soon climbed back to $0.6919 as investors absorbed RBNZ projections showing policymakers still expect to raise rates over coming months.
“They’ve said no go, because you’ve got COVID and too much uncertainty. Give it a few weeks, let the smoke clear, then the tightening cycle is still on the table,” said Imre Speizer, head of NZ strategy at Westpac.
Meanwhile, the dollar weakened slightly having earlier hit a nine-month high against the euro.
FED WATCHING
Euro zone bond yields dipped but held above lows touched a day earlier as investors sought direction ahead of U.S. Fed meeting minutes due later in the day.
Germany’s 10-year yield, the benchmark for the euro area, was down slightly at -0.485% by 1120 GMT, above the lowest in nearly two weeks of -0.501% touched on Tuesday.
The yield on benchmark 10-year Treasury notes rose to 1.2734%, compared with its U.S. close of 1.258% on Tuesday.
Investors will scan the Fed minutes due 1800 GMT for further clues on when the bank might start tapering its bond purchases.
“To see a successful taper in the next few months, we need to see more of those strong job prints,” said John Luke Tyner, fixed income analyst and portfolio manager at Aptus Capital Advisors.
“I don’t see the Fed backing out of support yet, I think we need to see the unemployment rate fall below 5%.”
Spot gold was down 0.1% at $1,784 per ounce by 1120 GMT, after hitting its highest since Aug. 6 at $1,795.25 in the previous session.
(Reporting Lawrence White in London; Additional reporting by Dara Ranasinghe and Elizabeth Howcroft in London, Tom Westbrook in Singapore and Alun John in Hong Kong; Editing by Ana Nicolaci da Costa and Hugh Lawson)
