Markets steady as China congress starts and monetary policy gets back in focus

World stocks stayed near peaks and currencies moved in tight ranges on Wednesday as China's Communist Party conference opened and the focus in Europe turned to speeches from top euro zone central bankers before next week's key policy meeting.

Talk over the next Federal Reserve Chairman also gave investors something to chew on as the MSCI's 47-country 'All-World' index added 0.08 per cent by 0821 GMT, staying at striking distance from the record high hit on Monday.

European shares steadied around four-month highs with a raft of company results in focus and euro zone bond yields fell ahead of a series of speeches from top European Central Bank officials before the next key policy meeting on October 26.

“Today, bond market investors will probably concentrate exclusively on the various ECB speakers, who could influence market expectations for the last time ahead of next week's meeting,” said BayernLB rate strategist Alexander Aldinger.

European Central Bank chief Mario Draghi, Chief Economist Peter Praet and Executive Board Member Benoit Coeure are among those officials scheduled to speak. First remarks from Draghi at a conference in Frankfurt had limited initial market impact.

The MSCI's index of Asia-Pacific shares outside Japan was flat, near its late 2007 peak after China President Xi Jinping kicked off the twice-a-decade party congress with a wide-ranging speech.

Jinping said the market would be allowed to play a decisive role in allocating resources but also said the role of the state in the economy had to be strengthened.

“His speech offered nothing to move the markets in Asia," Bayern LB's Aldinger also said.

Investors are keen for clear direction on economic and financial market reform over the next five years, but history suggests these events can be light on detail.

China's blue-chip CSI300 index added 0.8 per cent in reaction, while Shanghai stocks rose 0.3 per cent.

“Market participants are paying much more attention to the party congress this time, as they are watching if any surprise reforms will emerge amid concerns over economic growth,” said Yan Kaiwen, analyst with China Fortune Securities.

Still in Asia, Japan's Nikkei rose for a 12th consecutive day, getting a lift from hopes that this weekend's election will produce political stability and continuation of loose monetary policy.

An opinion poll by Kyodo showed Japanese Prime Minister Shinzo Abe's coalition was on track for a roughly two-thirds majority in Sunday's general election there.

FED TALK

In currencies, the dollar edged up amid speculation President Trump could chose a more hawkish leader to replace Federal Reserve Chair Janet Yellen, while investors awaited for any news on progress on U.S. tax reforms.

The dollar index rose 0.07 per cent to 93.54, extending a rebound from Friday's 2 1/2-week low of 92.749. It rose as high as 93.729 on Tuesday.

Interest rates futures imply around a 90 per cent probability of a Fed hike in December.

The euro was holding at $1.1763, still some way above the recent low and major chart support at $1.1667.

Dealers were wary ahead of speeches by several policymakers from the European Central Bank due later on Wednesday, which includes President Mario Draghi.

The biggest mover was Mexico's peso which boasted its biggest rise in over four months after trade ministers from the US, Canada and Mexico extended the deadline on a contentious round of talks.

US Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo said they faced “significant conceptual gaps” in their views and agreed to stretch out the talks in search of solutions.

That, however, eased fears of a collapse earlier this week.

In commodity markets, talk the next US Federal Reserve chief may be a policy hawk kept gold pinned down at $1,283.01 an ounce.

Oil prices were lifted by a fall in US crude inventories and concerns that tensions in West Asia could disrupt supplies. Brent crude futures were at $58.31, up 0.4 per cent from their last close - and almost a third above mid-year levels.

COMMENT NOW