Europe Stocks Rebound, Wall Street Steady as World Awaits Trump's Davos Speech

January 26, 2018

Frankfurt (Jan 26)  European stocks rebounded Friday as the U.S. dollar bounced from its recent three-year lows and Asia markets extended their winning streak to an eleventh consecutive session ahead of President Donald Trump's much-anticipated keynote address to the World Economic Forum in Davos.

U.S. equity futures are also indicating another solid start to the trading day on Wall Street after record closing highs for both the Dow Jones Industrial Average and the S&P 500 last night, with contracts tied to the former priced 62 points higher and those linked to the broader measure of U.S. share prices marked 9 points, or 0.32%, to the upside.

The corporate earnings calendar is light Friday, although Dow components Honeywell (HON - Get Report) and Colgate-Palmolive Co. (COL - Get Report) will post fourth quarter results today alongside figures from Rockwell Collins Inc. (COL - Get Report) . We'll also get durable goods orders for the month of December at 8:30 eastern.

In Europe, the Stoxx 600 benchmark was marked 0.44% to the upside in the opening minutes of trading, while France's CAC-40 added 0.4% thanks to a 4.6% advance for luxury goods giant LVMH Moet Hennessy Louis Vuitton SA  (LVMUY) , which posted stronger-than-expected fourth quarter earnings last night and lifted its 2018 growth forecasts.

Europe's gains were limited, however, by the rising single currency, which continues to test fresh-three years highs against the dollar and was marked at 1.2490 in early trading while the dollar index, a measure of the greenback's strength against a basket of six global currencies, slipped again to 88.82 despite Trump's attempt to support it last night.

President Trump will lay out his "America First" agenda to an audience of global CEOs, lawmakers and NGO bosses in Davos Friday in a speech that is scheduled for 8 am eastern time and follows a turbulent week for U.S. economic policy that included tariffs on imported goods from China and South Korea, threats to leave the North American Free Trade Agreement and the first apparent reversal of the country's "strong dollar" policy in at least a generation.

Overnight in Asia, the dollar's modest rebound, which followed comments from Trump with respect to his desire to have a strong currency, helped export-focused stocks around the region and lifted the MSCI Asia ex-Japan 0.36% higher into the close of trading, its eleventh straight winning session that matches the longest winning streak since 2015.

Japan's Nikkei 225, however, slipped 0.16% by the end of the trading day thanks in part to the still-elevated yen, which hit a four-month high of 108.95 during the session before paring the gains to around 109.30.

Global oil markets were reasonably quiet overnight, with prices easing from three years highs thanks in part to the dollar's mini-rebound, which traders used as a pretext to book profits after another bullish week, before recovering as the dollar retreated again.

Brent crude prices for March delivery, the global benchmark, were seen 9 cents higher from their Thursday close in New York at $70.51 per barril.


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