European markets are set to open slightly higher on Thursday as investors focus on political developments in Italy and key data releases after the oil-producing cartel OPEC agreed to cut production.
The FTSE 100 is seen 2 points higher at 6785,9; the German DAX should start 5 points higher at 10,645 and the CAC is set to open 4 points higher at 4582,7.
Investors continue concerned with political uncertainty in Italy ahead of a key referendum on Sunday and its implications on the banking system. The Italian central bank warned Wednesday that the country’s top three banks would need to hold further capital against their assets from 2018.
OPEC countries reached, for the first time in eight years, a deal to cut production. Oil prices climbed to nearly $52 per barrel on the news.
On the data front, the final November manufacturing PMI and unemployment rate for the euro zone will be published. The U.K. will see the release of PMI Manufacturing and mortgage rate figures.
Japan’s benchmark index rose more than 1 percent on Thursday as regional manufacturing surveys led by China beat expectations and on upbeat views a day after OPEC reached its first deal since 2008 to cut oil production.
The Nikkei 225 closed 1.12 percent, or 204.64 points, at 18,513.12, led by energy stocks such as Inpex, which was up 9.95 percent and Japan Petroleum Exploration, which jumped 12.2 percent. A weaker yen helped as well. The yen traded around 114.12 against the greenback as of 2:11 pm HK/SIN, compared to levels as low as 112 earlier this week.
Australia’s ASX 200 finished up 1.1 percent, or 59.73 points, at 5,500.2. The benchmark was led by strong gains in its energy sub-index, which was up 7.21 percent and its materials sub-index, which gained 2.88 percent.
Official statistics showed the Australia’s business investment fell by 4 percent in the third-quarter, a steeper fall than Reuters analysts forecast of a 2.5 percent decline. The fall in investments will likely impact the third-quarter gross domestic product due Dec. 7.
Chinese shares were in positive territory, the Shanghai composite gained 0.29 percent, while the Shenzhen composite was 0.297 percent higher. In Hong Kong, the Hang Seng index was up 0.58 percent.
China’s official manufacturing Purchasing Managers’ index (PMI) was up at 51.7, versus a Reuters poll of 51.0.
Meanwhile, China’s Caixin/Markit Manufacturing PMI dipped to 50.9, lower than 51.2 in October, but better than analysts expected. As well, Japan’s manufacturing PMI for November came in at 51.3 a tad better than the 51.1 expected.
PMIs are indicators of the economic health of the manufacturing sector, and a reading under 50 represents a contraction, while a reading above 50 indicates expansion.
South Korea’s Kospi traded up 0.17 percent.
The dollar touched a 9-1/2-month high against the yen on Thursday, as oil prices surged after OPEC agreed to output cuts – lifting inflation expectations and U.S. bond yields.
Steven Mnuchin, President-elect Donald Trump’s pick to lead the U.S. Treasury, gave no hint of any unease over the strong dollar in his first remarks since being named for the job, giving traders fresh impetus to buy the U.S. currency.
The dollar’s index against a basket of six major currencies last stood at 101.42. On Wednesday, it had risen as high as 101.83, nearing a 13-1/2-year peak of 102.05 set last week.
The dollar’s rebound came as oil prices jumped around 9 percent on Wednesday as OPEC members agreed to cut production, its first reduction since 2008.
The gains in oil prices stoked inflation expectations, which in turn sent U.S. Treasury yields higher given the negative impact of inflation on bond prices.
The higher Treasury yields fueled demand for the dollar relative to currencies such as the euro and yen, whose government bond yields are still low-to-negative.
The dollar rose notably against the yen, hitting a peak of 114.83 yen earlier on Thursday, its strongest level since mid-February. The dollar was last trading at 114.17 yen, down 0.2 percent on the day.
“I think it is just a matter of time that the dollar will test 115 yen after Mnuchin was silent about the dollar’s strength,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
Mnuchin said on Wednesday the administration would make tax reform and trade pact overhauls top priorities as he outlined Trump’s economic agenda along with Wilbur Ross, Trump’s nominee for commerce secretary.
“The good news is that they seem to be saying that no one will be tariffed up and no one will be named a currency manipulator on day 1,” Steven Englander, Global Head of G10 FX Strategy at CitiFX in New York, wrote in a note.