12 July 2016 at 11:23 GMT
European equity indices continue their current risk-on theme following on from a record closing high in the S&P 500, expectations of an upcoming UK rate cut plus an uncontested leadership change for Britain's ruling Conservative Party.
In data releases, Germany June Final CPI was 0.1% m/m; 0.3% y/y in line with expectations.
Alcoa Q2 earnings beat forecasts: 15c EPS vs. 9c exp. on revenues of 5.30 billion vs. 5.27bn exp. Shares rose 3.09% in aftermarket trading.
Finally, the Bank of England's Mark Carney has noted that UK exposure to Italian banks is low.
- US May Wholesale Inventories (1400) GMT
- Weekly API Oil Inventories (2030 GMT)
Lots of action in FX majors today, JPY crosses are all trading higher following Japan’s latest fiscal stimulus talks. USDJPY
at month highs touched 103.92 while EURJPY
reached 115.40 highs. GBP is stronger as well and continued to trade bid throughout the session as political uncertainty post-Brexit is fading with Theresa May set to be Britain's next prime minister.
In the options market GBP vols continued to trade lower again today, with 1month GBPUSD
down to 13.25 from 13.9 this morning. EURUSD
vols also trading a bit softer. ATM vols in USDJPY are stable, where high demand for upside strikes are holding up vols. This demand is particular driven by the upcoming fiscal stimulus package recently announced from the Japan government.
FX Options volatilities
Government bonds finally gave in to the pressure from stronger risk sentiment. US 2-year at a two-week high with December 2016 hike chance now improved to 30%. Credit spreads at post Brexit lows – with the notable exception of subordinated financials.
European equity indices continue their current risk-on theme following on from a record closing high in the S&P 500, expectations of an upcoming UK rate cut plus an uncontested leadership change of the ruling Conservative Party. Further fiscal stimulus expectations announced by Japanese prime minister Shinzo Abe also led to a positive close for Asian markets.
Financial stocks led the way this morning with 3%–4% gains seen for lenders Lloyds, Barclays, Intesa Sanpaolo and Deutsche Bank whilst Unicredit rallied 9% after announcing a strategic review that including selling a 10% stake in online broker FinecoBank.
German auto manufacturer Daimler released better than expected Q2 results sending its shares up 4% whilst BMW rose on increased June sales figures.
UK homebuilders such as Taylor Wimpey, Barratt Developments and Redrow continue to recover from their Brexit slump and pharma Shire rose 3% after winning US approval for a dry eye treatment.
US equity index futures trade positive and US Q2 earnings get underway with Alimentation Couche Tard, GMS and Fastenal scheduled to report today.
Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.
Japan's very own "Mr Whatever It Takes" Abe. Photo: iStock
— Edited by Clare MacCarthy