European Stocks Look to Reverse Global Slump as North Korea Tensions Cool
European stocks are expected to open higher Tuesday as global financial markets cautiously return to the risk table and eye the start of trading on Wall Street after the U.S. Labor Day holiday.
Britain's FTSE 100 is set to add around 0.1% at the opening bell, according to financial bookmakers IG, with export stocks getting support from a weaker pound sterling, which is marked around 0.2% lower against the U.S. dollar at 1.2929 after a mixed reading for U.K. retail sales over the month of August. Markets in Germany and France are likely to add modestly stronger gains, with investors cautiously adding to risk despite a strong single currency, which is holding over the 1.19 mark against the greenback.
Overnight in Asia, the U.S. dollar index, a measure of the greenback's strength against a basket of six global currencies, continued to weaken as regional investors favored safe-have assets such as gold and the Japanese yen amid the calm -- but serious -- rhetoric from the White House that followed North Korea's hydrogen bomb test on Sunday.
The dollar, which slipped 0.13% to 92.51, lifted the yen and held down gains for the Nikkei 225, which fell around 0.5% into the close of trading in Tokyo while the broader MSCI Asia ex-Japan benchmark was marked 0.03% lower at the start of European trading.
Global oils prices continued to react to developments in Hurricane Harvey-ravaged Houston area, with U.S. crude heading higher but gas prices notching further declines and retracing back to pre-storm levels and refiners and pipelines slowly return to full speed.
West Texas Intermediate crude futures for October delivery were seen 0.23% higher at $47.40 while Brent contracts for November, the global benchmark, fell 0.38% to $52.14 as investors continued to favor gold and governments bonds over commodities.
Spot bullion prices were little-changed at $1,336 per ounce in early London trading, but remain within touching distance of an 11-month high amid the ongoing "flight to safety" that has dominated markets since the North Korea bomb test. Benchmark 10-year U.S. Treasury bond yields, which did not trade yesterday, were marked 3 basis points lower at 2.13%.
Early indications from U.S. equity futures suggest a modestly positive open on Wall Street later today, with the Dow Jones Industrial Average looking to add about 6 points, or 0.03%, at the opening bell while the broader S&P 500 trades little-changed from its Friday close.
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