Publications
Partners
Sydney - Global stocks advanced as Nestlé sparked a rally in European shares and oil climbed for a third straight session after entering a bear market last week.
Equities rose as crude futures held above $43 a barrel. Nestlé climbed to an all-time high after being targeted by activist investor Dan Loeb. Technology shares had the biggest advance in the MSCI Asia Pacific Index. The pound climbed for a fourth day amid Brexit negotiations by UK Prime Minster Theresa May, whose leadership remains under threat.
Loeb has amassed a $3.5bn stake in Nestlé SA, targeting Europe’s largest company in the biggest bet of his two-decade career as an activist investor. Third Point, Loeb’s hedge fund, encouraged Nestle to sell its stake in cosmetics maker L’Oreal SA, increase leverage for share buybacks and adopt a formal profitability target, among other suggestions.
Investors are also awaiting clues from central bankers on policy paths for some of the world’s biggest economies. Federal Reserve Bank of San Francisco President John Williams made the case on Monday for further gradual interest rate increases, saying he expects inflation to rise to the central bank’s 2% target next year as unemployment edges lower.
Later on, European Central Bank President Mario Draghi will make speak in Portugal before Fed chair Janet Yellen makes an appearance in London on Tuesday.
Markets were gripped last week by a plunge in oil while equities, the dollar and Treasuries all made little headway. Global stocks remain near all-time highs, with the Bloomberg Dollar Spot Index on course for its first back-to-back quarterly declines in three years as investors question the inflation outlook.
With Bank of Japan Governor Haruhiko Kuroda also speaking at the ECB forum, the heads of key central banks have the chance this week to shape discussion by offering more clues on future policy.
There is “very little risk we see any central bank surprises,” Robert Rennie, Sydney-based head of global market strategy at Westpac Banking, told Bloomberg TV. “It looks like it’s a positive summer for risk sentiment. That certainly favors higher equity and higher yielding currencies at least in the very short term.”
Economic data may also drive momentum in financial markets, with key reports due on inflation, employment, manufacturing and housing from China to the US Markets in India, Malaysia, Indonesia, Philippines, Singapore and Bangladesh are closed Monday for a holiday.
What’s on investors’ watch lists this week:
US spending data this week may reveal consumers are only moderately rebounding and the inflation backslide is continuing - two things which suggest central bankers should feel little need to rush, according to Bloomberg Intelligence.
Durable goods orders on Monday are expected to show a 0.6% decline, as lack of details surrounding tax and trade reform cause reduced order activity. China’s PMI might have declined in June after unexpectedly remaining unchanged in May, reflecting government offers to cut overcapacity and leverage.
The official manufacturing measure is estimated to have dropped to 51 from 51.2. Also due this week: Japanese inflation, factory output, unemployment, household consumption and housing starts.
Here are the main moves in markets:
Stocks
The Stoxx Europe 600 Index gained 0.7% as of 09:19, with Nestlé surging 3.8%, the most in a year. L’Oreal jumped 2.6%, poised for a record close. The MSCI Asia Pacific Index rose 0.3%. Hon Hai Precision Industry jumped 6.7%, the most since April, and Samsung Electronics gained 1.4% to lead an advance among technology shares. Japan’s Topix rose less than 0.1%.
Trading was suspended in Takata after the air-bag maker filed for bankruptcy protection in the biggest corporate failure in postwar Japanese manufacturing. South Korea’s Kospi increased 0.4% to all-time closing high. Hong Kong’s Hang Seng Index added 0.7% and the Hang Seng China Enterprises Index advanced 1%.
The Shanghai Composite Index gained 0.9% while Taiwan’s Taiex jumped 1.3% to the highest level since 1990. Futures on the S&P 500 rose 0.2%. The underlying gauge rose 0.2% last week as tech shares extended a rebound.
Commodities
West Texas Intermediate oil climbed 1.3% to $43.56 a barrel. Futures are up 2.4% over the past three days, after dropping more than 20% from a February high. Gold declined 0.2% to $1 254.65 an ounce, after a three-day advance.
Currencies
The yen fell 0.2% to 111.48 per dollar. While the currency increased in the four previous days, the gains were incremental, with each session marking an advance of less than 0.1%.
The pound increased 0.3% to $1.2751, bringing its four-day gain to 1%. The euro was flat at $1.1199. The Bloomberg Dollar Spot Index was little changed after three days of declines. The South Korean won climbed 0.2%, increasing for a third session.
Bonds
The yield on 10-year Treasuries rose less than one basis point to 2.15 %. The yield on Australian government bonds with a similar maturity was little changed at 2.37%. UK benchmark yields added one basis point to 1.04%.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
