Shares climb as British budget, Powell testimony top agenda

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© Reuters. FILE PHOTO: People walk on a pedestrian bridge at the central business district (CBD) during morning rush hour, ahead of the opening of the National People’s Congress (NPC), in Beijing, China, February 29, 2024. REUTERS/Florence Lo/File Photo
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By Alun John and Ankur Banerjee

LONDON/SINGAPORE (Reuters) -World shares sat just below record highs on Wednesday and the 10-year Treasury yield rose from a one-month low as traders awaited congressional testimony from Fed Chair Jerome Powell, one of several potentially market-moving events in the coming days.

Also on the docket are the announcement of the British budget and U.S job openings data, both on Wednesday, China’s ongoing annual parliament meeting, the European Central Bank meeting on Thursday, and U.S. non-farm payrolls data on Friday.

In emerging markets, Egypt’s central bank let the pound tumble to record lows and hiked interest rates by 600 basis points at an unscheduled meeting, marking the start of a long-awaited devaluation with markets expecting talks between the government and the International Monetary Fund over an augmentation of the fund’s programme could come to fruition soon.

Back in developed markets, Europe’s broad STOXX 600 index rose 0.3%, trading just off Monday’s all-time high, and U.S. S&P 500 futures were up 0.3%, pointing to gains after a sell-off in U.S. large cap names overnight.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5%, helped by a bounceback in Hong Kong, where the benchmark was up 1.7%, though Chinese onshore bluechips dipped.

Beijing on Tuesday, set a widely expected 5% growth target for 2024 at its key parliament meeting that lacked major stimulus measures.

BRITISH BUDGET

British Finance Minister Jeremy Hunt will begin delivering his budget speech to Parliament in early afternoon in Britain, though it was not expected to cause significant ructions in global markets – unlike the fiscal announcement in 2022 that brought about the end of Liz Truss’s brief period as prime minister.

“The government doesn’t have a lot of wiggle room, so it will likely be quite dull for sterling in comparison with 2022 – one silver lining for markets from the Liz Truss budget is that it has ensured future governments will have to maintain a high degree of prudence,” said Jane Foley, head of FX strategy at Rabobank.

“Then we have Powell, but there has been so much Fedspeak in the past weeks, which – alongside the data – has been successful in pushing back expectations of early interest rate cuts, so I think payrolls data could have more market impact.”

Markets currently expect the Fed to begin cutting rates in June. At the start of 2024, traders had seen cuts as soon as the Fed’s March 20 meeting.

“It is labour market week in the U.S. we have (job opening data) today, and payrolls Friday. January was a bit murky and came as a setback from the six-month trend that we’ve had, so what everyone is going to try to understand is whether January was a fluke,” said Samy Chaar, chief economist at Lombard Odier.

U.S. DATA

Non-farm payrolls in January came in much higher than expected suggesting growth in the world’s largest economy was still strong, potentially deterring the Fed from cutting rates.

Tuesday data showed U.S. services industry growth slowed slightly, sending 10-year U.S. Treasury yields to one-month lows. The benchmark yield ticked up 3 basis points on Wednesday, to 4.16%, with Germany’s 10-year yield likewise moving 3 basis points higher to 2.35%. [US/] [EUR/GVD]

China’s 10-year bond yield fell to a 22-year low on expectations that authorities would keep monetary conditions easy.

Volatility remained low in currency markets, though the Japanese yen yen strengthened to 149.73 per dollar, on reports that some Bank of Japan board members think it would be appropriate to lift rates from negative territory at the March meeting. [FRX/]

The euro last was up 0.16% at $1.08730.

In cryptocurrency, bitcoin was hovering around $66,700, having breached a record high of $69,202 in the previous session, fuelled by investors pouring money into U.S. spot exchange-traded crypto products.

Spot gold wobbled and was at $2,126.3 an ounce after touching an all-time high of $2,141.59 on Tuesday. [GOL/]

U.S. crude rose 0.88% to $78.84 per barrel and Brent was at $82.66, up 0.74% on the day. [O/R]