HSBC, min­ers lift Euro­pean shares, Asia up

Kuwait Times - - BUSINESS -

Fore­cast-beat­ing prof­its at HSBC and strong gains for min­ers on the back of a two-year high in cop­per prices lifted Euro­pean shares yes­ter­day while the dol­lar edged up off 13-month lows against other ma­jor cur­ren­cies. Wall Street looked set to open higher, ac­cord­ing to stock in­dex fu­tures .

HSBC, Europe’s big­gest bank, un­veiled a 5per­cent rise in prof­its in the first six months of this year and its third share buy­back in a year, un­der­lin­ing progress in its turn­around plan.

Its shares gained as much as 3 per­cent in Lon­don, help­ing lift an in­dex of Euro­pean banks by 0.3 per­cent . How­ever, the stand­out per­form­ers were min­ing com­pa­nies, with an in­dex of their shares up 1.3 per­cent, as in­dus­trial metal cop­per hit a fresh two-year peak af­ter Chi­nese data showed that while man­u­fac­tur­ing growth cooled slightly this month a push on in­fra­struc­ture by the gov­ern­ment kept con­struc­tion hum­ming.

Cop­per on the Lon­don Metal Ex­change last traded at $6,388 a ton, up 1.0 per­cent on the day, hav­ing risen as high as $6,430. The pan-Euro­pean STOXX 600 share in­dex rose 0.4 per­cent, hav­ing fallen for the last two trad­ing days.

Shares of tobacco com­pa­nies weighed on the in­dex, un­der­per­form­ing again af­ter the US Food and Drug Ad­min­is­tra­tion pro­posed on Fri­day to cut nico­tine in cig­a­rettes to non­ad­dic­tive lev­els.

Bri­tish Amer­i­can Tobacco fell 4.7 per­cent, af­ter drop­ping 6.8 per­cent on Fri­day, and Im­pe­rial Brands fell 5.9 per­cent. Asian shares rose as in­vestors largely shrugged off a new North Korean mis­sile test, fo­cus­ing in­stead on a data-heavy week ahead.

MSCI’s broad­est in­dex of Asia-Pa­cific shares out­side Ja­pan re­versed early losses to rise 0.4 per­cent. Chi­nese shares rose, buoyed by sev­eral lead­ing com­pa­nies’ fore­casts for strong mid-year earn­ings. The blue-chip in­dex rose 0.5 per­cent and the Shang­hai Com­pos­ite both rose 0.6 per­cent. North Korea con­ducted a mis­sile test late on Fri­day that it said proved its abil­ity to strike the US main­land. The US re­sponded by fly­ing two bombers over the Korean penin­sula on Sun­day. But early jit­ters dis­si­pated some­what, with the Korean won re­vers­ing losses. The dol­lar was down 0.3 per­cent at 1,120 won, af­ter jump­ing al­most 0.7 per­cent on Fri­day. South Korea’s KOSPI rose 0.1 per­cent. The dol­lar dipped against the safe-haven yen, which traded at 110.54 to the green­back, up 0.1 per­cent on the day.

The euro fell 0.2 per­cent to $1.1730, lit­tle moved by an un­ex­pected ac­cel­er­a­tion in core in­fla­tion to a four-year high this month. The mea­sure is closely watched by the Euro­pean Cen­tral Bank, which has said it will de­bate later in the year whether to be­gin wind­ing back its bond-buy­ing stim­u­lus pro­gram. Its over­all in­fla­tion tar­get is close to but be­low 2 per­cent.

Yields on some lower-rated bonds fell af­ter the data. In nor­mal cir­cum­stances higher in­fla­tion would push yields higher. “It’s a step in the right di­rec­tion but not quite enough to make the mar­ket re­con­sider bond prices,” said Mizuho strate­gist An­toine Bou­vet.

Ster­ling fell 0.1 per­cent to $1.1316 but stayed near a 10-month high, with in­vestors eye­ing “Su­per Thurs­day” when the Bank of Eng­land an­nounces its lat­est pol­icy de­ci­sion and quar­terly in­fla­tion re­port. “We ex­pect el­e­ments of the rate de­ci­sion and In­fla­tion Re­port to con­tain hawk­ish tilts, thereby pro­vid­ing some sup­port to the pound,” wrote BMO cur­rency strate­gists in a weekly note to clients yes­ter­day. The dol­lar in­dex, which mea­sures it against a bas­ket of ma­jor cur­ren­cies rose 0.2 per­cent but held close to 13-month lows touched last week on un­cer­tainty over whether US Pres­i­dent Don­ald Trump will be able to push through his eco­nomic agenda and ques­tions over the pace of US in­ter­est rate rises. Such con­cerns have seen spec­u­la­tive bets against the dol­lar rise to their high­est since early 2013, by one broad mea­sure. “Our short-term po­si­tions in­di­ca­tors are flash­ing red in terms of ex­treme bets against the dol­lar, es­pe­cially against the euro and the Aussie and in this kind of en­vi­ron­ment, a small neg­a­tive sur­prise in data else­where can trig­ger a washout,” said Vi­raj Pa­tel, an FX strate­gist at ING in Lon­don.

Oil up on OPEC meet­ing

Oil prices hit two-month highs. An OPEC an­nounce­ment of a meet­ing next week of pro­duc­ers from the group and else­where to dis­cuss com­pli­ance with their oil sup­ply re­duc­tion pact added to up­ward pres­sure on prices from a threat of US sanc­tions against Venezuela.

This was in re­sponse to Sun­day’s elec­tion of a con­sti­tu­tional su­per-body that Washington has de­nounced as a “sham” vote. Brent crude last traded down 5 cents at $52.47 a bar­rel, hav­ing risen as high as $52.60 ear­lier yes­ter­day. “The sen­ti­ment in the oil mar­ket be­came very bullish af­ter OPEC said it will meet with part­ners in Abu Dhabi next week to dis­cuss com­pli­ance,” said Frank Schal­len­berger, head of com­mod­ity re­search at LBBW. — Reuters

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