Euro­pean stocks ad­vance as euro, gold weaken

The Pak Banker - - MARKETS/SPORTS -

Stocks traders put de­clines in Asia be­hind them as Euro­pean mar­kets rose with US in­dex fu­tures and com­modi­ties.

Govern­ment bonds fell, gold slid and the euro weak­ened. Euro­pean shares ad­vanced for the first time in three days on spec­u­la­tion the re­gion's cen­tral bank will ramp up mon­e­tary stim­u­lus on Thurs­day. Min­ers and banks led gains as a gauge of raw ma­te­ri­als re­bounded from its big­gest sell­off in a month, buoyed by gains in oil and cop­per. A sell­off in Ja­panese govern­ment bonds dragged Trea­suries and Ger­man bunds lower, gold fell a se­cond day and the euro dropped ver­sus most of its ma­jor peers.

Econ­o­mists sur­veyed by Bloomberg fore­cast that the ECB will de­liver a pack­age of eas­ing mea­sures in its at­tempts to bol­ster price growth. That's of­fer­ing sup­port to Euro­pean mar­kets af­ter a slide in China's ex­ports tem­pered a three-week rally that had re­stored al­most $5 tril­lion to the value of eq­ui­ties world­wide. The In­ter­na­tional Mon­e­tary Fund said Tues­day that volatile fi­nan­cial mar­kets and low com­mod­ity prices are height­en­ing risks for the global econ­omy, while DoubleLine Cap­i­tal's Jef­frey Gund­lach said bet­ting on stocks is a "big los­ing propo­si­tion."

"There's talk of rates cuts, in­creas­ing the size of the as­set-pur­chase pro­gram, and ex­pand­ing the range of prod­ucts that the ECB will buy," said Daniel Mur­ray, the Lon­don-based head of re­search at EFG As­set Man­age­ment. "Let's see to­mor­row how good Draghi is at play­ing the mar­ket: he has built up ex­pec­ta­tions be­fore and found them hard to meet."

The Stoxx Europe 600 In­dex rose 0.6 per­cent at 9:45 a.m. Lon­don time. French len­der Credit Agri­cole SA ad­vanced 2.6 per­cent as it an­nounced plans to boost an­nual profit to more than 4.2 bil­lion euros ($4.6 bil­lion) in 2019. In­di­tex SA, the world's big­gest cloth­ing re­tailer, gained 2.2 per­cent af­ter re­port­ing its fastest earn­ings growth in three years. Fu­tures on the Stan­dard & Poor's 500 In­dex ad­vanced fol­low­ing the bench­mark's big­gest drop in two weeks, gain­ing 0.3 per­cent. The gauge has about 2 per­cent up­side and 20 per­cent down­side, mak­ing for a lousy risk-re­ward trade-off, ac­cord­ing to money man­ager Gund­lach, who runs the $56 bil­lion DoubleLine To­tal Re­turn Bond Fund. The re­cent re­bound was a "bear mar­ket rally," he said.

Asian mar­kets showed less op­ti­mism than those in Europe. The MSCI Asia Pa­cific In­dex lost 0.3 per­cent as mea­sures of ma­te­ri­als and en­ergy stocks sank about 1.3 per­cent. Jiangxi Cop­per Co. -- China's big­gest smelter -- tum­bled 5.5 per­cent in Hong Kong, trim­ming this month's ad­vance to 18 per­cent. Ja­pan's Topix dropped for a third day, led by ship­ping stocks af­ter Mit­subishi UFJ Mor­gan Stan­ley low­ered price tar­gets for the sec­tor's three big­gest com­pa­nies. The Shang­hai Com­pos­ite In­dex slid 1.3 per­cent.

"As much as I would like to agree with the pos­i­tive sen­ti­ment, sev­eral key macro head­winds re­main on point and the driv­ers of the past week are now show­ing signs of top­ping out," Evan Lu­cas, a mar­kets strate­gist in Mel­bourne at IG Ltd., said in an email to clients. "Mar­kets will re­main volatile and trade in a di­rec­tion­less man­ner." The euro fell 0.4 per­cent to $1.0971 and slid 0.5 per­cent to 123.45 yen. Ja­pan's cur­rency, which typ­i­cally moves in the op­po­site di­rec­tion to the na­tion's stocks, is the best per­former among ma­jor peers this year.

South Korea's won led de­clines among Asian cur­ren­cies, drop­ping 0.8 per­cent against the dol­lar. The na­tion's cen­tral bank will re­view mon­e­tary pol­icy on Thurs­day and seven out of 18 econ­o­mists sur­veyed by Bloomberg fore­cast the bench­mark in­ter­est rate will be cut from a record-low 1.5 per­cent. Canada de­cides on in­ter­est rates on Wed­nes­day, and New Zealand's cen­tral bank also has a pol­icy meet­ing this week.

Crude oil rose 1.2 per­cent to $36.95 a bar­rel in New York, af­ter a 3.7 per­cent slide on Tues­day that marked its big­gest loss in al­most four weeks. U.S. in­ven­to­ries climbed by 4.4 mil­lion bar­rels last week, the in­dus­try-funded Amer­i­can Pe­tro­leum In­sti­tute was said to re­port. Govern­ment data Wed­nes­day is fore­cast to also show sup­plies in­creased, keep­ing stock­piles at the high­est level in more than eight decades.

Nickel re­bounded 2.4 per­cent af­ter tum­bling 8.5 per­cent on Tues­day. Cop­per gained 1.1 per­cent. Cop­per de­mand won't catch up with sup­ply un­til 2017, ac­cord­ing to a se­nior of­fi­cial at Freeport-McMoRan Inc., the largest pub­licly traded pro­ducer of the metal. Gold fell 0.3 per­cent, ex­tend­ing Tues­day's re­treat from a one-year high. The Bloomberg Com­mod­ity In­dex rose 0.4 per­cent, af­ter a 1.1 per­cent loss in the last ses­sion. It's dropped 22 per­cent in the past year.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.