Monday, 16 April 2018

Sterling rises despite Syria intervention as investors eye data

LONDON (Reuters) - The pound rose on Monday despite Britain’s military intervention in Syria, as investors focused on data that could help shore up expectations of a May interest rate hike.

Britain struck Syria with cruise missiles on Saturday in partnership with Western allies, targeting chemical weapons facilities. But the military action did not appear to hurt risk appetite as bond yields rose and the dollar fell.

Sterling on Monday rose 0.1 percent to $1.4250, continuing a two-week rally against the dollar that on Friday saw the pound push towards a new post-Brexit referendum high.

Data on British unemployment, wages and inflation numbers are due this week.

Markets expect the Bank of England to raise rates by 25 basis points next month as it tries to curb inflation and with Brexit-related risks having subsided for now and wage data still pointed upwards.

“With markets almost fully discounting a BoE rate hike, this week’s run of monthly indicators are anticipated to give the hike a green light,” Marc Ostwald, a global strategist at ADM Investor Services International in London, said in a note.

Against the euro, sterling fell 0.1% to 86.69 pence per euro, but remained at its highest against the single currency since late May 2017.

(Reuters) - U.S. stock index futures rose on Monday as investors bet the weekend’s U.S.-led missile attack on Syria would not escalate into a broader conflict.

The focus was back on earnings, with Bank of America reporting a 34 percent rise in quarterly profit. Its shares were up 0.84 percent in premarket trading.

JPMorgan, Wells Fargo and Citigroup kicked off the quarterly earnings season on Friday, although their performances failed to excite investors.

Thomson Reuters data is expecting S&P 500 companies to report an 18.6 percent rise in profits in the first quarter, their biggest rise in seven years.

Many traders say that reactions to results could be muted as market participants have already priced in benefits from corporate tax cuts, reflected in the stock market’s strong rally in 2017 and early 2018.

At 7:01 a.m. ET, Dow e-minis were up 154 points, or 0.63 percent. S&P 500 e-minis rose 16.25 points, or 0.61 percent and Nasdaq 100 e-minis gained 41.5 points, or 0.62 percent.

On Saturday, the United States, France and Britain launched 105 missiles on Syria in retaliation for a suspected poison gas attack.

The countries said the missile strikes targeted Syria’s chemical weapons capabilities and were not aimed at toppling Syrian President Bashar al-Assad or intervening in the civil war.

President Donald Trump tweeted “mission accomplished” after the attack, underlining expectations that Western action would be limited.

Russian President Vladimir Putin warned that further Western attacks on Syria would bring chaos to world affairs, as Washington prepared to increase pressure on Russia with new economic sanctions.

Retail sales data for March is scheduled for release at 8:30 a.m. ET. Sales are expected to have increased 0.4 percent after falling for the previous three months that prompted analysts to downgrade their first-quarter economic growth forecasts.

Among other stocks, General Electric shares were down more than 1 percent after the company said it took a $4.24 billion equity charge and reduced earnings for the last two years by 30 cents a share.

Netflix shares rose 1.44 percent ahead of its results expected after market close on Monday.

Reporting by Sruthi Shankar and Tom Finn

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