Stocks hover near new records, oil crazy

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Check out Mike Dolan’s day in the US and international markets

After the first three days of Donald Trump’s new presidency, broad-based Wall Street stocks are hovering near new record highs — slowly shifting focus to the dreaded corporate earnings season and economic updates.

Wednesday’s tech-led jump in U.S. equity indexes, spurred by Trump’s plan to boost investment in artificial intelligence and impressive Netflix results saw the S&P 500 clock a new intraday record and volatility measures hit their lowest level of the year so far.

Stock indexes pulled back a touch ahead and Treasury yields hit new highs in renewed “at-risk” territory, despite brisk interest in Wednesday’s latest selloff of 20-year bonds.

One of the backdrops of the week so far is that heavy sovereign debt sales in developed markets have been met by strong orders from investors – allaying some pre-year fears over government funding. In addition to the 20-year bond sale, bond auctions in Britain, France and elsewhere have been canceled by fixed income funds.

Good inflation readings from the United States, Canada and Europe helped and, at 46 basis points, the so-called “term premium” embedded in 10-year Treasuries returned to its lowest level of the year.

Also helping was a retreat in U.S. crude oil prices to near two-week lows, partly due to Trump’s pro-drilling push. On Monday, the new president declared a national energy emergency aimed at easing environmental restrictions on energy infrastructure and projects and easing permitting for new transmission and pipeline projects.

Trump talked to Davos

There wasn’t much new in Trump’s latest tariff push. Despite announcements of possible new tariffs on China, the EU, Canada and Mexico have not kept their earlier commitments on “day one” increases – putting the issue on hold in the coming weeks.

Instead, on Wednesday, Trump turned his attention to Russia, threatening to add new tariffs to Moscow if the country does not agree to an end to its war in Ukraine.

All eyes will be on Trump’s virtual appearance at the World Economic Forum in Davos at 11:00 a.m.

On Wall Street, Thursday will bring economic updates after a data-starved week, and weekly jobless claims will be closely watched again later, with January’s first business survey due.

The day’s earnings diary was headlined by Texas Instruments and General Electric, with markets now gearing up for updates from the so-called Magnificent Seven next week.

Overseas, Chinese shares rose slightly after Beijing announced further measures to bolster the market on Wednesday – although tariff concerns capped any gains.

The plan, jointly announced by six financial regulators, including the securities regulator, will direct large state-owned insurance companies to increase the size and scope of their investments in China’s A-shares, which are traded on mainland and equity funds.

But overseas appetite for China’s threat seems highly speculative. More than half of U.S. businesses in China, the highest in five years, said they were concerned about a further deterioration in the bilateral relationship between the world’s two largest economies, according to a survey published on Thursday.

In Europe, stocks pared most of their gains to new records – another European Central Bank interest rate cut next week is now widely expected and ECB officials appear to be pricing in more cuts.

The more hawkish Norwegian central bank left key policy rates unchanged on Thursday as expected.

The dollar traded in a narrow range against its major peers.

The Japanese yen was flat at 156.49 against the dollar, with markets pricing in a 96% chance of the Bank of Japan’s quarter-point rate on Friday and after months of panic, recent tightening now appears to have eased.

With another month of sub-target inflation recorded last month, the Bank of Canada is said to be likely to cut rates by a quarter point next Wednesday.

Key developments that should provide more direction for US markets later Thursday:

* US Weekly Jobless Claims, Kansas City Federal Reserve January Business Survey; Eurozone January consumer confidence; Canadian November retail sales

* US corporate earnings: Texas Instruments, General Electric, CSX, Northern Trust, Union Pacific, Express Surgery, McCormick, Eleven

* World Economic Forum in Davos – including Bank of Spain Governor José Luis Escriva, German Finance Minister Jörg Küçük and Argentine President Javier Millais.

(Editing by Mike Dolan, at XXXX, mike.dolan@thomsonreuters.com)