DAX Snaps 3-day Gain
Frankfurt’s DAX 40 fell 0.8% to around 25,240 in early trading on Wednesday, snapping a three-session winning streak, as renewed gains in oil prices and elevated bond yields weighed on sentiment. Brent crude rose back above $100 a barrel as Iran stepped up attacks on tankers transiting the Strait of Hormuz, fueling inflation concerns and raising the prospect of higher interest rates. Investors now await the Federal Reserve’s meeting minutes later in the day for clues on the path of US interest rates. Meanwhile, better-than-expected German industrial production provided some support, with output rising 2.0% month-on-month in August, well above expectations of a 0.5% increase, keeping hopes of an emerging economic recovery alive. On the corporate front, shares of Infineon fell 3.6%, while Siemens Energy declined 2.0%, Deutsche Bank dropped 1.3%, and Vonovia lost 1.3%.
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08:11:49 AM UTC
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(Updates to European morning trade) September Fed minutes due at 2 p.m. ET October Fed hike odds fall to 21.6% from about 51% a week ago Dovish BOJ member Sato backs gradual rate increases By Rocky Swift and Medha Singh Oct 7 (Reuters) — The US dollar edged higher on Wednesday, buoyed by rising oil prices, while investors awaited Federal Reserve meeting minutes and remarks from policymakers for signals on a potential rate hike. The euro gave back some of its gains in the prior session when French bonds rallied after the frontrunner in next spring's presidential election outlined plans to cut spending. The yen weakened even after a dovish Bank of Japan board member said she would support interest rate increases. Later on Wednesday, the US central bank is due to release minutes of its September policy meeting, when it raised interest rates for the first time since 2023, to contend with inflation. Mood Is Less Hawkish? Comments from Fed policymakers have come across as less hawkish following lower-than-expected personal consumption expenditure data and jobs figures last week. "We've been able to have that long-dollar view on for a few weeks now. It's worked quite nicely. But I think there's an element of momentum starting to slow here," said Dominic Bunning, head of G10 FX strategy at Nomura, adding that higher oil prices were lending the dollar short-term support. "If we get any sign of improvement in the Middle East (situation) going into the midterms, or further signs that US data is softening... that could also be something that weighs on quite elevated rate expectations in the year ahead." The dollar index, which measures the US dollar against a basket of currencies, rose 0.3% to 102.13, recovering from a 0.27% slide on Tuesday. The euro fell 0.4% to $1.1216. The Japanese yen weakened 0.13% to 158.31 per dollar, and sterling lost 0.21% to $1.3248. Brent futures rose back above $100 a barrel on concerns of supply disruptions from a storm threatening US oil-producing regions and attacks by Yemen's Iran-aligned Houthis on Aden International Airport. To end a war that has roiled energy markets and stoked inflation for eight months, Iran must make a meaningful reduction in its nuclear enrichment capacity, US Vice President JD Vance told Reuters. Bond yields around the world have climbed in recent weeks due to expectations of central bank rate hikes as well as concerns about government finances. French debt is under growing pressure as politicians struggle to curb the budget deficit ahead of a divisive election in 2027. The calling of a snap election in Spain added to the stress on the euro. But the euro rallied sharply on Tuesday after far-right French presidential candidate Marine Le Pen raised her target for spending cuts to €140 billion ($158 billion) from €125 billion in savings originally planned if she wins power in 2027. France's economic situation is serious but the country does not need help at this stage from the European Central Bank, Ban
08:12:17 AM UTC
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Dollar gains as oil climbs and investors focus on the Fed
08:15:41 AM UTC
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European stocks weaken despite record-setting US session Oil up on escalating Saudi-Houthi tensions Euro drops on concerns about energy shock (Recasts story, adding comments, background) By Stefano Rebaudo and Scott Murdoch Oct 7 (Reuters) — European stocks and the euro dropped on Wednesday as oil prices rose above $100 amid renewed Middle East tensions while fiscal concerns continued to weigh on sentiment. MSCI's main world stocks index fell 0.28%, while Europe's STOXX 600 was down 0.45%. Nasdaq futures fell 0.11% while S&P 500 futures were roughly unchanged. The S&P 500 hit a fresh record on Tuesday, up about 0.6% on the day, while the tech-heavy Nasdaq gained 0.4% to also mark an all-time high. The Dow Jones Industrial Average rose 0.5%. MSCI's broadest index of Asia-Pacific shares excluding Japan was down 0.5%, led by declines in Hong Kong and Singapore. The index is up 0.9% so far this month. “In the very early stages of the fourth quarter, typically the best quarter of the year for equity returns, markets are being driven by a confusing ‘stocks up, US breadth down, yields up, oil down and up, and down’ narrative,” said Jeremy Batstone-Carr, an economist at Raymond James. Brent crude rose 1% to $101.58 per barrel as the market weighed supply constraints from a storm heading for US oil-producing regions and attacks by Yemen's Iran-backed Houthis on Saudi Arabia. The French yield spread versus safe-haven German Bunds — a market gauge of the risk premium investors demand to hold French debt —was wider after narrowing for two days. It was last at 131 bps, and reached almost 160 bps last week. French bonds have been under pressure as expectations of higher European Central Bank rates and political uncertainty before the 2027 election raise doubts over France's ability to fix its finances. "The magnitude of the move is striking given the 2027 election remains several months away and France's deteriorating fiscal dynamics are hardly new," said Laura Cooper, Nuveen's head of macro credit and global investment strategist. "What has changed is sharply higher yields, leaving investors less willing to look through those vulnerabilities." The rekindling of investor concerns weighed on the euro, which slipped 0.47% to $1.1208. It slid to a 17-month low against the dollar at $1.1161 earlier this week. Wider yield spreads in the euro area weigh on the single currency by boosting expectations of European Central Bank monetary easing, reviving worries about fiscal sustainability and stoking fears of increasing fragmentation in the euro area. Us Treasury Auctions To Show Depth Of Demand The yield on the US 10-year Treasury bond was up 3.8 bps at 5.307%. Market participants will closely watch a 10-year Treasury bond auction later in the day and a 30-year auction on Thursday, which will show the depth of investor demand for US debt, analysts said. US longer-dated yields hit a 24-year high on Monday amid a persistent selloff since late August due to inflation and
8% to around 25,240 in early trading on Wednesday, snapping a three-session winning streak, as renewed gains in oil prices and elevated bond yields weighed on sentiment. Brent crude rose back above $100 a barrel as Iran stepped up attacks on tankers transiting the Strait of Hormuz, fueling inflation concerns and raising the prospect of higher interest rates. Investors now await the Federal Reserve’s meeting minutes later in the day for clues on the path of US interest rates. 5% increase, keeping hopes of an emerging economic recovery alive.
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