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Macron boosts Europe stocks, gold slips fourth day

Jun 19 2017 13:45
Adam Haigh and Samuel Potter, Bloomberg

Sydney - European stocks jumped a second day, boosted by French equities after the country’s new president won a free hand to drive through economic reforms. The pound edged higher and the euro was steady as Brexit talks began.

Miners and banks were the biggest winners as the Stoxx Europe 600 gained. The CAC 40 jumped after President Emmanuel Macron’s government claimed a historic majority in France’s legislature, albeit amid a miserable turnout.

In Asia, the focus is on the MSCI decision on whether to include China A shares in its global indices; Hong Kong stocks surged in advance of Tuesday’s announcement. Oil erased a drop, but continues to languish at about $45 per barrel as fears of an ongoing supply glut refuse to go away.

Investors are seemingly in risk-on mode as the week begins, even as a cloud of uncertainty swirls around both UK leadership and the outlook for Brexit negotiations. Macron’s decisive victory was another leg up for pro-European parties, while markets globally took the hawkish tone struck by the Federal Reserve last week in their stride.

“Risk assets around the world are rallying again as the ‘carry party’ resumes,” Societe Generale SA strategist Kit Juckes wrote in a client note. Fed Chair Janet Yellen “did nothing to persuade the market” to take its hawkish outlook for the path of interest rates seriously, he said.

Here are some of the key upcoming events:

Chicago Fed President Charles Evans and Fed Bank of New York President William Dudley are both due to speak in New York Monday. They are the first of a slew of Fed appearances scheduled for this week. Vice-Chair Stanley Fischer is up tomorrow, then the list reads: Eric Rosengren, Robert Kaplan, Jerome Powell, James Bullard and Loretta Mester.

MSCI announces whether it approved Chinese-listed stocks in its global benchmarks. The $6.8trn onshore market is the world’s second-largest and accounts for 9% of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts.

MSCI’s decision is expected Tuesday after the close of US markets. The International Paris Air Show is underway.

Here are the main moves in markets:

Stocks

The Stoxx Europe 600 jumped 0.7% as of 12:44 after falling 0.5% last week. Futures on the S&P 500 Index rose 0.3% after the underlying gauge posted a 0.1% advance last week.

Currencies

The Bloomberg Dollar Spot Index was little changed.  The yen declined 0.1% to 111 per dollar. The pound rose 0.1% to $1.2793. The  euro was little changed as Macron’s party was poised to win the biggest majority in 15 years.

Bonds

The yield on 10-year Treasuries fell less than one basis point to 2.15%. UK 10-year yields were little changed at 1.02%; those in Germany rose one basis point to 0.28%.

Commodities

West Texas Intermediate oil gained 0.3% to $44.89 a barrel. Crude has fallen four weeks straight as US drillers continue to add rigs, blunting OPEC-led efforts to rebalance an oversupplied market. Gold dropped 0.2% to $1 251.09 an ounce, heading for an eighth decline in nine sessions.

Asia

Samsung Electronics led gains among tech shares in the MSCI Asia Pacific Index, climbing 2.2 percent. Japan’s Topix advanced as the yen weakened. Hong Kong stocks surged 1.2% before a decision on whether MSCI will include China shares in global indices.

The Hang Seng China Enterprises Index jumped 1.4%, the most since May 25. The Australian dollar dropped 0.1% after Moody’s cut the long-term ratings on the country’s four major banks.

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european markets  |  equities  |  gold  |  markets  |  global markets

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