Pound retreats on Brexit day; Europe stocks drift: Markets wrap

Bloomberg.- European stocks and U.S. share futures struggled for direction as a bounce on optimism over the American economy faded and President Donald Trump battled to revive his legislative agenda. The pound weakened as the U.K. started its exit from the EU.

The Stoxx Europe 600 Index and futures for the S&P 500 erased early gains to trade little changed. Sterling swung between gains and losses before falling after a letter formally triggering Britain’s departure from the European Union was delivered. The euro slid and German 10-year bonds rose after a Reuters report that the ECB is wary about making a monetary policy shift. The South African rand trimmed its decline as three party leaders were said to oppose the dismissal of Finance Minister Pravin Gordhan.

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Global stocks remain on course for a fifth straight month of gains as the reflation trade triggered by Trump’s election proves its resilience. Stronger growth — from the world’s biggest economy to developing nations — has helped underpin the rally, even amid doubts about the president’s ability to enact pro-growth policies.

“Trump and markets are moving on, with the help of better U.S. data,” Societe Generale SA strategists, led by Ciaran O’Hagan, wrote in a client note, referring to the rebound in risk appetite after last week’s failed health-care bill curbed reflation bets.

Here are this week’s key events:

– EIA data due at 3:30 p.m. London time may show a 2 million-barrel expansion in American crude inventories.
– Proposals to design and build U.S. President Donald Trump’s promised 2,000-mile border wall between the U.S. and Mexico are due.
– Samsung Electronics Co. will introduce its Galaxy S8 smartphone, the company’s first
new mobile phone since the debacle with the Note 7 battery fires that led to its recall.

Here are the main moves in markets:

Stocks

– The Stoxx Europe 600 Index traded little changed as of 8:29 a.m. in New York.
– Futures on the S&P 500 were little changed. The underlying index rose 0.7 percent on Tuesday.

Currencies

– The British pound fell 0.2 percent. The euro weakened 0.6 percent.
– The Bloomberg Dollar Spot Index was 0.1 percent higher.
– South Africa’s rand pared its decline to 0.2 percent.

Bonds

– European bonds advanced, with the yield on Germany’s 10-year bunds falling four basis points to 0.35 percent.
– Treasuries gained, with the yield on the benchmark note due in a decade falling two basis points to 2.4 percent. The yield advanced four basis points Tuesday.

Commodities

– West-Texas Intermediate crude oil rose 0.5 percent to $48.60, extending Tuesday’s 1.3 percent advance as an unexpected disruption in Libyan crude output helps investors shrug off record U.S. stockpiles.
– Gold rose 0.1 percent to $1,252.91.

Asia

– The MSCI Asia Pacific Excluding Japan Index rose 0.4 percent, with Australia’s S&P/ASX 200 Index and New Zealand’s S&P/NZX 50 adding at least 0.9 percent. Japan’s Topix Index fell as more than 1,500 of its constituent companies traded without the right to their latest dividend.

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