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As the market waits for the European Central Bank monetary policy decision, the global stocks recovered slightly  from the bearish tone the past few days. Headed by the surging US equities, the stocks in Asia and Europe found an instant retrieval after the market opens on Wednesday. With the strength of the dollar on the side, the stock market was likely in the green momentum except for the slide of the US bonds.

Recovering Stocks

At the time of writing, US stocks were on the upside track led by Nasdaq Futures with a 0.07 percent increase and the S&P 500 futures advancing 0.07 percent as well. The US Dollar Index added 0.07 percent to 100.58 while the Euro Index climbed 0.05 percent to 87.54. Also, Dow 30 made a 0.18 percent jump to 19,251.78 while DAX soared 1.39 percent to 10, 924.20.

In Asia, equities were also soaring, headed by the 3.61 percent jump of SoftBank following the $50 billion investment raised by President-elect Donald Trump in the telecommunication sector. Japan’s Nikkei 225 rallied 0.74 percent to 18,496.69 while the Nikkei Volatility marked a new 52-week low after losing 5.88 percent.

Further, Taiwan stocks went higher with Taiwan Weighted advancing 0.14 percent, a new month high, as the shares in the electric sector moved up. Hong Kong’s Hang Seng rose 0.3 percent ,while Philippine’s PSEi Composite climbed 0.89 percent. In Australia, S&P/ASX 200 touched 0.91 percent increased with major gains from mining and financial sectors after the RBA decided to keep its rates on hold.

Amid these momentous stocks, US 10-year yield dropped 0.74 percent and US 30-year yield dipped 0.63 percent. It was the same as well for the US 2-year yield and 5-year yield which lost 0.35 percent and 0.55 percent respectively. On the other hand, Euro Bund gained 0.31 percent and UK Gilt extended its gains with a 0.29 percent increase.

Meanwhile, the US dollar remained steady among the major currencies at 10:25 UTC. Here are the latest conversions:

USD/JPY               114.08                   up

EUR/USD             1.0728                   up

GBP/USD             1.2609                   down

USD/CHF             1.0097                   down

AUD/USD            0.7445                   down

USD/CAD             1.3277                  flat

Monetary Policy

In the financial market, eyes are all in the upcoming ECB meeting after the constitutional amendment in Italy failed to materialize. The European market went slightly unsteady after Italy’s Prime Minster announced its resignation upon the conclusion of the vote. Italy happens to be one of the largest members of the European Union, thus, the political disagreement affect the economic stability of the nation.

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Most of the central banks have kept their monetary policy steady due to the lack of economic sustainability and as the inflation targets were not met. Similarly, the ECB might imitate the lower cash rates as it keeps its quantitative easing program. Considerably, the discussion over the post Brexit was not yet done, making the financial sector in the European region unstable.

Another big thing would be the Fed rate hike. Central banks may delay any adjustment of their policies due to the changes that a rate hike might bring, globally. Technically, a rate increase will help the greenback hit the green candles. In this case, banks need to make the necessary call to sustain the equilibrium, not only in the foreign exchange market, but also in the trade sector in general.

Apart from the ECB meeting, the weekly report on US jobless claims and the preliminary reading on consumer sentiment for December are scheduled to be announced before the end of the week. China and Australia will report their respective trade data while Canada will release its building permits and new house price inflation data.

 

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