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Europe set for higher open as US futures rally

Wednesday 06:00 GMT

Overview

Stock markets across Asia were mixed after disappointing earnings and weak US data pushed Wall Street lower overnight.

European bourses are expected to open higher, with spreadbetters predicting the UK’s FTSE 100 will add 34 points to 7,133 and Germany’s Dax to gain 70 points to 11,605. The rebound comes after Wall Street climbed sharply off its session lows on Tuesday, and index futures suggest the S&P 500 will advance by 3 points to 2,282 when trading gets under way later in New York.

What to watch

Major central banks were in the spotlight, with the Federal Reserve delivering its policy decision later on Wednesday and the Bank of England following suit on Thursday. Both are expected to keep monetary settings on hold, just as the Bank of Japan did on Tuesday.

Hot topic

The market rally triggered by the election of Donald Trump has hit a rough patch, with shares under pressure after initial gains spurred by optimism over potential tax cuts, deregulation and infrastructure spending under the new US president.

The dollar slid following the decision on Monday evening by Mr Trump to dismiss acting US attorney-general Sally Yates for opposing his travel ban on people from seven Muslim-majority nations from entering the US.

Compounding that were figures on US employment costs, home prices, manufacturing activity and consumer confidence released on Tuesday that suggested the country might be stuck in a shallow growth trajectory.

Equities

Hong Kong’s Hang Seng index returned from the lunar new year long weekend, and played catch-up by falling 0.7 per cent. Markets in mainland China remained shut.

Australia’s S&P/ASX 200 added 0.6 per cent while in Japan the Topix edged up 0.3 per cent, reversing an early decline. Nintendo fell 3 per cent with investors disappointed by lacklustre sales in the December quarter and the company’s decision to keep its fiscal year revenue target unchanged, despite the recent debut of Super Mario Run for smartphones and the looming March launch of the new Switch games console.

The S&P 500 ended 0.1 per cent lower on Wall Street while the Nasdaq Composite closed flat, with UPS and sportswear maker Under Armour among the companies delivering gloomy results and profit forecasts.

Forex

The US dollar index stabilised in Asia after shedding a combined 1 per cent over the previous two sessions to close below 100 for the first time since November 11, just after the US election.

The dollar index was up 0.2 per cent at 99.708 on Wednesday, prompting a reversal for other Asian currencies. The Japanese yen was 0.4 per cent weaker at ¥113.21 per dollar while the Australian dollar fell 0.2 per cent to $0.7567 after a gauge of manufacturing activity dropped by the most in six months.

The UK pound was marginally weaker at $1.2574 in the lead-up to the BoE’s policy meeting on Thursday.

Commodities

Gold was down 0.2 per cent at $1,208.94 an ounce following a three-day win streak.

Brent crude, the international oil marker, was down 0.3 per cent at $55.44 a barrel while West Texas Intermediate was off 0.2 per cent at $52.73.

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