Stocks advance with dollar as haven demand eases

Bloomberg

Markets struck a note of cautious optimism on Wednesday, with European stocks rising and haven assets declining. UK shares fell as the pound extended its gain following the surprise election announcement.
Banks and automakers helped spur the rebound in Stoxx Europe 600 Index following the biggest one-day loss since November. Sterling edged higher after hitting the strongest level since October on Tuesday. Oil fluctuated before key data is released on Wednesday, the dollar strengthened and US stock futures pointed to a higher opening.
After drops on Tuesday, investors seem to be taking the addition of yet another macro risk in their stride. The UK vote joins a slew of elections to be held this year against a backdrop of rising populism in the Europe, while geopolitical tensions are simmering over both North Korea and Syria and the pace of monetary tightening in the world’s biggest economy looks uncertain.
“We’re still hugely vulnerable to political risks,” said Christopher Jeffery, asset allocation strategist at Legal & General Investment Management in London. “Polling for the first round of the French election is hugely tight. We have no clear indication of how the drama in North Korea will play out. And those factors are
more important to us than the ebb and flow of earnings news in the short term.”
The Fed’s Beige Book release on Wednesday will be keenly eyed for clues as to what’s driven the recent cooling of US economic activity. The first round of voting in the French election is on Sunday and the two leading candidates will run off in a winner-takes-all contest on May 7. US oil inventories fell 840,000 barrels last week, according to the API. More official EIA data due today may show a larger drop of 1.4 million barrels.
The Stoxx Europe 600 increased 0.3 percent as of 8:22 a.m. in New York, after dropping 1.1 percent on Tuesday. Futures on the S&P 500 rose 0.4 percent after the underlying gauge slipped 0.3 percent Tuesday. IBM slumped
in after-hours US trading after
its 20th consecutive quarterly sales decline.
The yen dropped 0.6 percent to 109.04 per dollar after gaining 0.5 percent Tuesday. The Bloomberg Dollar Spot Index rose 0.2 percent following a two-day decline. The pound rose less than 0.1 percent to $1.2853 after its 2.2 percent surge on Tuesday. The euro was little changed at $1.0726.
The yield on 10-year Treasuries rose four basis points to 2.21 percent after an eight-basis-point plunge Tuesday. The yield on German notes due in a decade also increased five basis points to 0.20 percent.