Breakfast Today

"US equities yesterday enthusiastically reversed the declining trend of the past week, taking the S&P-500 and Dow Jones to new record highs, while the recently punished Nasdaq chalked up the largest rise as bargain hunters searched for oversold situations. Apple, for example, made a good recovery after having declined for the previous six sessions. Closing at their best levels of the day, buying confidence was clawed largely from a display of strength amongst overseas markets whose foundations had been established during early morning trade in Asia. A prediction from New York's Federal Reserve President, William Dudley, that the current inflationary pause will eventually give way to higher wages within a tightening labour market, pushing it back closer to the Central Bank's 2% target, also helped boost confidence. Steel stocks were a feature, climbing further off the seven-month low it set last Thursday, at one stage driving the NYSE Arca Steel Index up as much as 2.1%. This particular rally followed Commerce Secretary Wilbur Ross telling Bloomberg that President Trump intends to take "bold action" to address the national security risks posed by steel imports. Semiconductor, biotechnology, and banking stocks also found good buying interest, moving higher along with most of the other major sectors. Inevitably enough, Treasuries pulled back into negative territory, countering initial strength and lifting the yield on benchmark ten-year notes up by 2.7 basis points at 2.178%. The Nikkei Stock Average jumped almost 1% this morning to a fresh 22-month high as the yen fell, though other Asia-Pacific markets were quietly mixed. Following broad gains Monday, for example, South Korea's Kospi and Hong Kong's Hang Seng eased fractionally, while Australian traders took profits on recent S&P/ASX 200 gains, while the Shanghai composite was all but unchanged. Oil prices were slightly higher in Asia after hitting fresh seven-month lows in New York, with investors doubting how effective the production cuts being led by by Saudi Arabia and Russia can actually be. European markets also put in a good performance on Monday, led by led by industrials, oil & gas and basic materials stocks. The STOXX Europe 600 rose 0.89%, scoring its biggest one-day percentage gain since April 24 after French President Emmanuel Macron's upstart party scored a strong majority during Sunday's parliamentary elections, even if they were marked by a record low voter turnout. Presently riding on a high, he is expected to table his least popular, business friendly reforms within his first 100 days, in order to gain international respect which, by this time next year, should have translated into stronger economic growth. This sentiment reflected in strong performances by both the CAC-40 and Xetra Dax, which led equity gains around the Bloc. UK shares fully participated yesterday, despite a nervous trading environment created by the start of Brexit negotiations. Traders were not deterred by the latest terror-related incident in North London, but warmed to increased anticipation that a softer, more business-friendly Brexit will be the eventual outcome. As a result, the FTSE-100 enjoyed its best session since 9th June, finding demand in the same sectors that lead the European indices, while retailers also staged a good recovery after having been excessively sold on Friday in response to Amazon's proposed acquisition of Whole Foods market Inc. Although the UK is not scheduled to release any major macro statistics today, both the Governor of the Bank of England, George Carney, and the Chancellor of the Exchequer, Phillip Hammond, are scheduled to make speeches at a Mansion House breakfast event commencing at 08:30hrs BST, after the latter had been forced to delay setting out his view on the UK economy at last week's annual dinner in response to the tragic tower block fire in Kensington. Traders in particular will be keen to hear anything more regarding the opportunity for the UK and US to establish a free-trade agreement following Liam Fox's the joint appearance with Wilber Ross yesterday at a US government-run investment conference just outside Washington, although such a bilateral agreement clearly cannot be concluded until the UK is no longer part of the European Union. The EU is due to publish its April Current Account data, while the US offers the same statistic for Q1'2017, Weekly Redbook and API Crude Oil Stocks; speeches are also scheduled from the Fed's Stanley Fisher and FOMC's Robert Kaplan. The UK reporting season is now slowing, so there are fewer scheduled earnings or trading updates to anticipate; just Wolseley (WOS.L), N. Brown Group (BWNG.L), RWS Holdings (RWS.L) and Accsys Technologies (AXS.L) are due this morning. Overall, however, European equities appear set to open in an upbeat mood once again this morning, although gains will be limited after yesterday's strong movement. The FTSE-100 is seen moving between flat and 10 points up in early trading."