London: The upward march in global stock markets continued, with European equities extending a rally as economic data underpinned growth. The yen was the only G10 currency to rise against the dollar after the Bank of Japan pared bond purchases.
The Stoxx Europe 600 index rose for a fifth day as data showed joblessness in the euro area declined to the lowest level since early 2009 last month and German industrial production rebounded in November. The pound fell as a reshuffle of senior UK government ministers descended into chaos, and China’s yuan dropped after the central bank was said to have effectively removed an adjustment mechanism used for its currency fixing. Oil traded near $62 (Dh228) a barrel.
Earnings reports due this week from banks including JPMorgan Chase & Co. and Wells Fargo & Co. will likely now dominate the market’s focus as traders look for more reasons to chase stocks trading at or near record highs. Analysts who raised profit estimates for companies around the world last week outnumbered those cutting them by the biggest margin since Citigroup Inc. began compiling the data 18 years ago.
Equity levels were tested in Asian trading hours when Samsung Electronics Co. missed profit forecasts and the BOJ announcement hit Japanese shares, underscoring how the rollback of central bank stimulus could affect markets. But most of the region’s major gauges still ended in the green.
Gold drifted lower weighed down by a firmer dollar on the back of concerns about instability in Europe, while a buoyant stock market also sapped enthusiasm for bullion.
Spot gold was down 0.5 per cent at $1,314.51 an ounce at 1100 GMT. Last week, prices touched their strongest since Sept. 15 at $1,325.86.
US gold futures fell 0.4 per cent to $1,315.50 an ounce.
The dollar hit a more than one-week high against a basket of other major currencies on Monday. It was up 0.2 per cent on Tuesday, making commodities priced in the greenback more expensive for buyers using other currencies.
“The dollar has bounced back, partly due to weakness in the euro,” said Jonathan Butler, commodities analyst at Mitsubishi in London.
The euro is down due to concerns about upcoming Italian elections, problems forming a government in Germany and lingering concerns about Brexit, he added.
“There’s also the continuing rally in the equity markets.
All of that has probably helped take the wind out of gold’s sails,” Butler said.
Over the next few days, gold may extend losses to around $1,300 and the 100-day moving average around $1,290, he added.
Other analysts expect gold to bounce back.
Spot gold may test resistance at $1,329 per ounce, as suggested by a Fibonacci retracement analysis and a triangle, according to Reuters technical analyst Wang Tao.
“A break above last week’s high of $1,324 could see the yellow metal make a move on the September top of $1,355,” said MKS PAMP Group trader Tim Brown.