Sterling steadies as EU considers Brexit request; stocks inch up
Boris Johnson.
On Wall Street, chipmakers fell along with shares of Texas Instruments, while Apple shares rose after Morgan Stanley said the iPhone maker’s soon-to-be-launched video streaming service could boost its services revenue.
“What I think is causing the hesitation is the fear of other bellwether companies also disappointing,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
Sterling inched higher, with European Union leaders expected to grant a three-month extension to the Oct. 31 deadline for Britain’s departure.
“While weaker, the bottom hasn’t fallen out of the pound given that a no-deal Brexit has seemingly been taken off the table,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
The pound was yanked down to $1.2850 from $1.30 after UK lawmakers put the brakes on the government’s Brexit plans again on Tuesday.
Sterling was last trading at $1.289, up 0.14% on the day.
The Dow Jones Industrial Average rose 91.94 points, or 0.34%, to 26,880.04, the S&P 500 gained 4.72 points, or 0.16%, to 3,000.71 and the Nasdaq Composite added 5.67 points, or 0.07%, to 8,109.96. The pan-European STOXX 600 index rose 0.06% and MSCI’s gauge of stocks across the globe gained 0.05%.
In commodity markets, oil prices were higher. US crude rose 1.05% to $55.05 per barrel and Brent was last at $60.16, up 0.77% on the day.
Benchmark 10-year notes last rose 5/32 in price to yield 1.7485%, from 1.766% late on Tuesday.
Gold firmed on Wednesday as uncertainty over Britain’s upcoming exit from the European Union and concerns over a possible slowdown in the global technology sector weighed on equities, prompting investors to seek refuge in bullion.
Spot gold was up 0.3% at $1,492.01 per ounce as of 1146 GMT. US gold futures rose 0.5% to $1,495 per ounce.
“There is a bit of risk aversion in equity markets and gold is up again after consolidating over last few days,” said Julius Baer analyst Carsten Menke. “There are some bargain hunters in the gold market, especially as equities are down today.” European shares dipped for the first time this week as a profit warning from Texas Instruments raised worries about the global microchip industry, while UK lawmakers hit the pause button on Brexit.
British Prime Minister Boris Johnson said on Tuesday it was up to the EU to decide whether it wanted to delay Brexit and for how long, after a defeat in parliament made ratification of his deal by an Oct. 31 deadline almost impossible.
Meanwhile, China’s Vice Foreign Minister Le Yucheng said on Tuesday Beijing and Washington had achieved some progress in trade talks.
Tit-for-tat tariffs between both the countries have rattled financial markets and stirred global recessionary fears.
“The US-China trade truce that was agreed a few weeks ago weighed a little bit on sentiment in the gold market, but we need to acknowledge that this was more of a paper deal at least for now,” Menke said.
“The tariffs and the growth uncertainty remain in place so this is still positive for gold.” Investors are awaiting the US Federal Reserve’s meeting at the end of the month to see if the central bank will cut rates for a third time this year.
David Govett, head of precious metals at Marex Spectron, said market players were expecting the Fed to cut again.
“So if they don’t, it will be short-term negative for gold,” Govett said. “If they do, it won’t be as bullish because it is already written into the markets.
“We’re going to see gold make a move back up above $1,500; there’s too much going on in the world for it to stay down here.” Elsewhere, silver was up 0.1% at $17.53 an ounce. Platinum fell 0.1% to $890.55 and palladium was down 0.4% at $1,747.96 per ounce.
Oil rose above $60 a barrel on Wednesday after government data showed a surprise draw in US crude stocks and as the prospect of deeper output cuts by OPEC and its allies offered support.
US crude stocks fell by 1.7 million barrels last week as refineries hiked crude runs by 429,000 barrels per day (bpd), the Energy Information Administration said. Analysts had expected an increase in U.S. inventories of 2.2 million barrels.
Brent crude futures were up 44 cents, or 0.74%, to $60.14 a barrel at 10:13 a.m. CDT . West Texas Intermediate (WTI) crude futures for December delivery were up 48 cents, or 0.88%, to $54.96 per barrel.
Oil prices had fallen earlier in the session on data from industry group the American Petroleum Institute showing U.S. stocks rising more than analysts had expected, by 4.5 million barrels to 437 million barrels.
The U.S. Energy Department’s report “has put some buyers in the market, but it will be interesting to see if it lasts. While this will distract from demand destruction, the market will eventually come back to it,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
Reuters
