- European stocks flat after tame Wall Street session
- Fed officials dial back taper talk
- GBPUSD hits 1.37, highest in almost 3 years
European stock markets were flat in early trade on Wednesday after a mildly positive session on Wall Street and mixed bag in Asia. Reflationary pressures continued as US 10-year rates rose close to 1.2 per cent and the 2s10s curve steepened to its widest since May 2017. Equity markets are coming off record highs and the chop sideways reflects a degree of uncertainty as investors pick their way through the minefield of cases, vaccines, stimulus, reflation and an upcoming earnings season.
Coronavirus cases are picking up in China, raising concerns about a fresh wave in Asia’s largest economic driver. Chinese stocks were lower, while shares in HSBC and Standard Chartered led the decliners on the FTSE 100 at the open. But progress in vaccinating populations in the UK and US, with Europe moving more slowly but still in the right direction, continues to underpin a broadly positive risk outlook, even if valuations are stretched and rising rates could cause trouble down the line. Investors are probably now looking for a bit of a consolidation and some more visibility over what is coming over the hill in terms of stimulus and vaccines.