Feb 4 - A look at the day ahead from Danilo Masoni.
With the Reddit tumult under control, markets have returned to their comfort zone. World shares are a tad lower but within striking distance of last month’s record peak and on track for their strongest week in three months.
Positive soundings from the earning season, Italy tapping former ECB chief Draghi to solve its political crisis, hopes for big-time U.S. stimulus and bullish comments by Fed policymakers on economic growth are all lending a new impetus to reflation trades.
Ten-year U.S. Treasury yields set a new three-week high at 1.151% and Brent crude is at an 11-month peak. In Europe, despite a double-dip recession, German 10-year yields are approaching six-month high.
In a sign of confidence, Shell boosted its dividend even as Q4 profits dropped to the lowest in over two decades, boosting shares almost 1% pre-market. Deutsche Bank meanwhile posted its first annual net profit since 2014, sending shares nearly 4% higher before the bell.
On the radar is also the Bank of England. No policy changes are expected but it will likely set its sight on the prospects of an vaccine-driven economic recovery and release the findings of a consultation on what negative rates would mean for banks.
One dampener: speculation China may want to tighten its policy drove short-term rates higher. Also watch the dollar -- at its strongest in more than two months on signs U.S. economic recovery is outpacing the rest of the developed world.
Key developments that should provide more direction to markets on Thursday:
* Unilever reported underlying sales growth for the fourth quarter that was in line with estimates
* Roche got a fourth-quarter lift from its COVID-19 test business
* Nokia reported better-than-expected fourth-quarter revenue and underlying profits, buoyed by a strategy revamp.
* Frankfurt-listed shares in retail trader darlings GameStop and AMC fell in early trade
* Bank of England meeting
* Egypt central bank meets
* Japan auctions 30-yr bonds
* U.S. corporate events: Cigna, Bristol Myers-Squib, Merck, New York Times, Ford, Motorola
Reporting by Danilo Masoni