Market buzz: US Q2 GDP at 5.0%?, India hikes, ECB's Praet pumps euro

1700:Close Miners paced gains on Wednesday, as the US dollar slipped after ECB chief economist Peter Praet left the door open to the announcement, for as soon as the following week, of the exact end-date for the ECB's asset purchases.

It was by no means a promise, but it was made abundantly clear that ECB's Governing Council was set to broach the subject.

Dividend proxies and more defensive issues on the other hand fell back, as the above served to push government bond yields higher, even as traders looked out to next week's US central bank policy meeting.

Out on the second-tier index, RPC Group and Workspace retreated following investor updates from the two, while Alfa Financial Software Holdings got a boost from an upwards target price revision out of Berenberg.

FTSE 100 up 25.57 points at 7,712.37.

1500: How good were today's US foreign trade numbers you ask? Good enough - perhaps - to put second quarter annualised US gross domestic on a 4-plus handle (if not 5-plus), says Pantheon Macroeconomics's Ian Shepherdson.

The economist points out the 1.9% month-on-month jump in overseas sales excluding aircraft and oil, such that exports were 14% higher on an annualised basis over the three months to April versus the previous three months.

Imports on the other hand were only up by 4% over that same time frame and were set to slow - indeed turn negative - in May as the post-hurricane surge in imports continued to fade, he said.

"The non-oil deficit has now almost returned to the level prevailing before the storms. Net trade is set to make a big contribution to Q2 GDP growth, making a 4-plus rate look entirely plausible at this point. We wrote a few weeks ago that Q2 growth could even hit 5%; that's not our base case but it is not outlandish, either."

1435: In anticipation of higher levels of implied volatility going forward, analysts at Morgan Stanley recommend five trades, including being 'long' the US dollar and 'long' oil.

However, they comment that: "[...] Long USD is a crowded trade now among short-term investors. We like short USDJPY to play this theme. 3) Nikkei volatility is unusually compressed to S&P 500 vols and should underperform on JPY strength we expect. 4) While we are long oil ourselves, we fear it might be a consensus trade now and replace our outright Brent long with calls."

1330: America's international trade deficit fell by 2.1% month-on-month in April to reach -$46.2bn (consensus: -$49.0bn), according to the Department of Commerce.

1212: India not long ago hiked interest rates unexpectedly, the first rise since 2014, by 25 basis points to 6.25%.

Inflation in India recently reach 4.58%, above the target set by Reserve Bank of India policymakers as oil prices climb and India's improving economy leads to growing consumer spending.

Also citing a looming monsoon season that is expected to be boost the economy further, the RBI decided to increase the policy repo rate.

Earlier in the week the governor of the RBI, Urjit Patel, wrote in the FT: "Given the rapid rise in the size of the US deficit, the Fed must respond by slowing plans to shrink its balance sheet. If it does not, Treasuries will absorb such a large share of dollar liquidity that a crisis in the rest of the dollar bond markets is inevitable."

1152: Some seeming progress in trade talks between the US and China, with Beijing offering to buy $70bn worth of US goods in exchange for having no further tariffs imposed on Chinese imports.

Sentiment is positive in Europe on the back of this news, says market analyst David Madden at CMC Markets, though Italy's FTSE MIB index is lower. "Later today, the Italian Chamber of Deputies will vote on the new coalition. The anti-establishment parties want to raise public spending while cutting taxes in a bid to stimulate the economy. Italy is already heavily indebted, and further borrowing could weigh on investor confidence."

1126: Ahead of the US market open, TD Securities currency analysts feel its a "positive day in terms of equity market sentiment" with both Europe and Asia having a strong session so far. "Not surprisingly, this seems to be going hand in hand with EUR's rebound."

Euro-dollar is up by 0.4% on the day, while the USD is weaker versus majors more broadly, with the DXY dollar index down 0.2% with only Japan's ten and the Swiss franc each lower by around 0.3%. The Aussie dollar is the top performer on a strong GDP report.

"On the EM front, we highlight a surprise hike by the RBI in India. Poland will announce rates later today."

1058: The EU Commission says retaliatory tariffs on US goods should start to apply from early July.

Chinese steelmakers are seeking new export destinations in Africa and South America, Reuters is reporting, as shipments to their main overseas buyers in southeast Asia fall by double digits with US trade actions "threatening to kill off some markets entirely".

1013: After a start to the week which has seen outperformance across both construction and services PMI readings in the UK, the emphasis now shifts towards the geo-political affairs, says Joshua Mahony, market analyst at IG, as we move into a quieter period on the economic calendar.

"With the US trade data released this afternoon, there is a certain weariness of the potential impact Donald Trump will have upon risk sentiment given his propensity to tweet around such events," Mahony says. "With China attempting to stifle US tariffs, we are clearly at a crucial juncture for global trade, despite the relative optimism seen throughout global financial markets."

The US trade data is due at 1330 BST.

0929: With Ferguson shares touching all-time highs ahead of third quarter results later this month, analysts at Canaccord edged their share price target up to 6,080p from 5,985p as they reckon these numbers will be "supportive", with attractive profit growth driven by strong US organic growth and margin improvement.

The group will pay out a special dividend of $4 at the end of this month, with a record date of 8 June, as well as continuing with its share buy back. "We expect profit growth to slow from the strong first half performance as the comparatives become more difficult, but we continue to expect a good US result. If the trends in the US continue through to July, we see some modest upside risk to FY2018 consensus estimates."

"Overall, the shares look well supported by good underlying trends in Ferguson's key US market, market share gains and a strong balance sheet....All looks solid but valuation continues to look relatively fair after the strong run in the share price."

0916: Following a speech from ECB chief economist Peter Praet, the euro's up 0.2% against the pound and 0.44% against the dollar a 1.1770.

Analyst Neil Wilson at Markets.com said the bearded central banker's comment about "improving" signals showing the convergence of inflation towards the ECB's targets aim, points to confidence about tightening sooner rather than later and that the overall tone of the speech was "fairly hawkish".

"The euro is stealing the spotlight this morning following rumours that the European Central Bank could discuss the end of asset purchases during their meeting next week," said Konstantinos Anthis, head of research at ADS Securities. "The European currency had been under pressure in recent months as the data didn't provide the necessary stimulus while political uncertainty in Italy and Spain left investors undecided about buying the currency. So do these rumours affect the fundamental outlook of the shared currency?

"Earlier in the year we were expecting the ECB to go ahead and end purchases towards the end of the summer but a bearish string of data cast doubts on this scenario. Now that this is back on the table it might just be the catalyst the euro needs in order to stage a meaningful reversal from its current lows. If indeed the ECB would discuss putting an end to their quantitative easing program and indicate a date when they expect this to happen then yes, things could change for the euro."

0913: Wednesday's London open market report finds the FTSE recovering some of the gains lost yesterday, up almost 20 points or 0.26% to reach 7,706.7.

Commodities stocks are pacing the gains thanks to the dollar weakness helping oil and metals prices, with Anglo American, Centrica and Rio Tinto atop the leaderboard.

"Oil prices are recovering from recent lows to continue a two-day rally (to the benefit of energy shares around the world) on the back of a surprise API oil drawdown (even if gasoline stocks rose; US consumer confidence barometer, driving less?) and in spite of talks about oil-producing nations mulling adding back supply," opines Accendo Markets market analyst Mike van Dulken in a note to clients.

0853: Shares in WH Smith are up 6% on the back of a good Q3 update.

Analysts at Hargreaves Lansdown said the ongoing headwind of lower footfall means the High Street business has seen sales drop again, but the pace of decline is notably slower than reported earlier in the year. "We suspect the Royal Wedding and warm weather are contributing factors, but even if we look past these short-term boosts, it’s impressive how the group’s cost-cutting measures mean rising profit margins are offsetting lower revenues."

The Travel business, the engine behind WH Smith’s recent growth, continued to fly higher with like-for-like sales and margins both heading in the right direction and another 25-30 units are set to open this year.

"The attraction of the travel business is the customer is usually in such a rush that convenience takes priority over price, or in the case of airports, there aren’t many alternatives where passengers can pick up a sandwich, magazine or book. This gives the group that most valuable of qualities: pricing power."