Global shares track US higher ahead of Draghi comments

Published July 20, 2017
Associated Press

Global stock markets tracked Wall Street higher ahead of comments from European Central Bank President Mario Draghi which will be dissected by traders in terms of what they mean for the future of the bank's monetary stimulus.

KEEPING SCORE: In Europe, Britain's FTSE 100 advanced 0.7 percent in early trading to 7,481 while France's CAC 40 rose 0.5 percent to 5,240. Germany's DAX gained 0.7 percent to 12,534. Futures indicated that Wall Street would have a slow start a day after benchmarks touched record highs. Both S&P futures and Dow futures were up less than 0.1 percent.

CENTRAL BANKS: Japan's central bank opted to keep its monetary stimulus intact while downgrading its outlook for inflation. The Bank of Japan's policy meeting ended Thursday with no change to its injections of trillions of yen (hundreds of billions of dollars) into the economy each year through government bond purchases. The European Central Bank also kept its policy unchanged after its latest meeting.

DRAGHI IN FOCUS: Markets are now waiting for Draghi's post-decision news conference held for clues about the bank's plans. ECB officials have been cautious about signaling any exit from its bond purchase program. That is even though most analysts think the bank will have to taper off the purchases next year because it will start running out of eligible bonds to buy. Markets reacted sharply to remarks by Draghi in a speech on June 27 where he spoke about gradual reductions in stimulus as the economy grows stronger. The euro went higher and so did interest yields on longer-term bonds, developments that could prematurely blunt the stimulus effect.

ANALYST TAKE: "Investors will be carefully listening to ECB head Mario Draghi at his policy update press conference this afternoon for any indication (explicit or implicit) as to the timing he expects tapering to begin," said Mike van Dulken at Accendo Markets.

EURO IN FRONTLINE: Europe's single currency is likely to be in the front-line of any changes in Draghi's tone. Ahead of the meeting, it was 0.2 percent lower at $1.1486.

ASIA'S DAY: Japan's Nikkei 225 advanced 0.6 percent to 20,144.59 and South Korea's Kospi gained 0.5 percent to 2,441.84. Hong Kong's Hang Seng index rose 0.3 percent to 26,740.21 while the Shanghai Composite Index was up 0.4 percent to 3,244.86. Australia's S&P/ASX 200 gained 0.5 percent to 5,761.50. Stocks in Southeast Asia were mixed.

OIL: Benchmark U.S. crude was up 24 cents at $47.36 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, the standard for international oil prices, rose 33 cents to $50.03 per barrel in London.