The euro and the British pound, Europe’s top two currencies, extended gains Thursday as investors focused on recent central bank comments about the possibility of tighter monetary policy. Stocks were mixed ahead of U.S. economic data, including the latest revision to first-quarter growth.
KEEPING SCORE: In Europe, Germany’s DAX fell 0.1 percent to 12,631 while the CAC 40 in France fell 0.6 percent to 5,225. The FTSE 100 index of leading British shares was 0.5 percent lower at 12,631. Wall Street was poised for a solid opening, with Dow futures and the broader S&P 500 futures up 0.2 percent.
EUROPEAN CURRENCIES: European currency markets have been volatile in recent days after leading central bankers appeared to hint to a turn in monetary policy soon. European Central Bank President Mario Draghi was upbeat about growth pushing up inflation, prompting traders to conclude that the bank may soon start easing its emergency stimulus measures. Meanwhile, Bank of England Governor Mark Carney conceded there may be a case for an interest rate hike. The comments prompted big rises in the euro and the pound. The euro was up a further 0.3 percent at $1.1415 and near 14-month highs, while the pound rose 0.4 percent to $1.2977. Earlier, the pound breached the $1.30 mark for the first time since last month during the general election campaign.
ANALYST TAKE: “An apparent acceptance by the heads of the U.K. and European central banks that tighter monetary policy may be appropriate in the not too distant future is once again supporting the currencies,” said Craig Erlam, senior market analyst at OANDA. “Comments in recent days appear to suggest they’re reluctantly accepting the growing consensus within their central banks and preparing markets for a potential move.”
SKY RISE: Shares in British broadcaster Sky rose 3.2 percent even though the government referred Twenty-First Century Fox’s takeover bid to competition authorities. Analysts think that the deal, which will see Rupert Murdoch consolidate his media empire, will eventually go through after some concessions are made.
U.S. DATA: Traders will be digesting the final revision to U.S. economic growth in the first quarter, alongside weekly jobless claims. “With investors already doubting whether the Fed will raise rates again this year, it will be interesting to see how they respond should we get a downward revision in the first-quarter figure,” said OANDA’s Erlam.
ASIA’S DAY: Japan’s benchmark Nikkei 225 index rose 0.5 percent to close at 20,220.30 and South Korea’s Kospi advanced 0.6 percent to 2,395.66. Hong Kong’s Hang Seng gained 1.1 percent to 25,965.42 and the Shanghai Composite added 0.5 percent to 3,188.06. Australia’s S&P/ASX 200 climbed 1.1 percent to 5,818.10.
ENERGY: Benchmark New York crude was up 53 cents at $45.27 a barrel while Brent, the international standard, rose 64 cents to $48.18 in London.