Italy firms up as investors bet against snap poll; euro slides

Oil tops $55 for first time in 16 months

LONDON, Dec 5, (Agencies): Italian shares rose on Monday as investors bet against an immediate snap election in Italy following Prime Minister Matteo Renzi’s resignation after defeat in a constitutional reform referendum.

Markets had been jolted by the scale of Renzi’s defeat which pointed to further turbulence and political crisis in the euro zone’s heavily indebted third-largest economy and particular uncertainty was focussed on the country’s fragile banks.

The euro fell as low as $1.0508 and the Milan bourse shed as much as 2 percent at the opening, while Italian bond yields spiked sharply higher.

But most of these moves quickly reversed. The euro roared back above $1.06, still down on the day, Italian stocks moved higher, and Germany’s DAX and Europe’s Ftseurofirst index of leading 300 shares both rose 1.5 percent.

US futures pointed to a rise of about 0.5 percent at the open on Wall Street.

Italian financials rose 0.5 percent having fallen more than 4 percent, and shares in the world’s oldest bank, Monte dei Paschi, were flat on the day after being suspended at the openung.

Bonds remained under pressure though. Italy’s benchmark 10-year bond yield jumped 11 basis points (bps) to 2.01 percent, widening the premium investors demand for holding Italian bonds over safer German bonds to 175 bps, before easing slightly.

Markets had earlier taken some encouragement when Austria’s far-right presidential candidate was soundly defeated by a pro-European contender, confounding forecasts of a tight election.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.4 percent and Japan’s Nikkei closed down 0.8 percent.

China’s CSI 300 index tumbled 1.7 percent. Hong Kong’s Hang Seng index retreated 0.7 percent.

Wall Street ended Friday on a cautious note, with the Dow off 0.11 percent, while the S&P 500 rose 0.04 percent and the Nasdaq gained 0.09 percent.

In currencies, the dollar was supported by expectations of a US rate increase this month and more to come next year. The dollar index,, which tracks the greenback against a basket of six global peers, was up 0.2 percent at 100.95.

Against the yen, the dollar rose 0.4 percent to 114 yen .

The New Zealand dollar NZD=, which earlier weakened almost 1 percent to $0.707 after Prime Minister John Key unexpectedly announced his resignation on Monday, recovered a little to trade down 0.5 percent at $0.7090.

New Zealand stocks ended the day 0.7 percent lower.

Sterling could be vulnerable to developments in Britain’s Supreme Court on Monday, as judges hear the government’s appeal against a ruling that parliament must have a vote on Brexit before the process can formally begin.

The pound was last down 0.1 percent at $1.2710, having risen to a multi-mongth high on Thursday on indications from a leading government minister that a “soft Brexit” might be the outcome rather than a “hard Brexit”.

US

US stocks are resuming their climb Monday, led by gains in bank stocks, sending the Dow Jones industrial average to another record high. Technology companies, which have weakened since the presidential election, recovered some of their recent losses. European stocks were mostly higher, but Italy’s market fell after Italian voters rejected constitutional changes and the country’s premier said he would resign.

US stocks are resuming their climb Monday, led by gains in bank stocks, sending the Dow Jones industrial average to another record high. Technology companies, which have weakened since the presidential election, recovered some of their recent losses. European stocks were mostly higher, but Italy’s market fell after Italian voters rejected constitutional changes and the country’s premier said he would resign.

The Dow Jones industrial average rose 77 points, or 0.4 percent, to 19,247 as of 11:56 a.m. It closed at a record high Thursday. The Standard & Poor’s 500 index jumped 14 points, or 0.6 percent, to 2,206. The Nasdaq composite climbed 51 points, or 1 percent, to 5,306. Small-company stocks on again outpaced the rest of the market.

Small-company stocks rose more than the rest of the market. The Russell 2000 jumped 18 points, or 1.4 percent, to 1,332. Thanks to a big rally in November, the Russell is up 17 percent this year, or more than twice as much as the S&P 500. Smaller companies, which are more domestically focused than large multinationals, could stand to benefit more than larger companies from a pickup in US growth.

The rising price of oil sent energy companies higher. Conocophillips picked up $1.89, or 3.9 percent, to $50.01 and Hess rose $2.02, or 3.5 percent, to $59.94. Chevron, which has surged 27 percent this year, rose $1.24, or 1.1 percent, to $114.24.

Banks resumed their post-election rally and are trading at their highest levels since early 2008. Goldman Sachs gained $4.77, or 2.1 percent, to $228.13, a nine-year high. Citigroup picked up $1.29, or 2.3 percent, to $57.31. While stocks traded lower overall last week, banks are on a fourweek winning streak since the election.

Microsoft added $1.16, or 2 percent, to $60.41 and chipmaker Nvidia rose $3.10, or 3.5 percent, to $91.55. Customer-management software developer Salesforce.com climbed $2.41, or 3.5 percent, to $70.82. Tech stocks are down about 1 percent since the election as investors have wondered about the effects of President-elect Donald Trump’s potential trade policies. The stocks had also reached all-time highs earlier this year.

Consumer stocks and materials companies also outperformed the rest of the market. Travel website operator Tripadvisor added $1.38, or 3 percent, to $47.84 and Amazon jumped $18.66, or 2.5 percent, to $759. Dow Chemical rose 91 cents, or 1.6 percent, to $56.33 and steelmaker Nucor added $1.82, or 2.9 percent, to $64.85.

Europe

European stocks and the euro rebounded sharply Monday as investors were reassured by the speed of Italian Prime Minister Matteo Renzi’s resignation after losing a crunch referendum.

The region’s markets began the day in negative territory, with Milan tumbling two percent, but recovered somewhat with sentiment soothed also by the defeat of the far right in Austria’s presidential election.

Equities also staged a recovery. Frankfurt jumped 1.6 percent on the day, Paris gained 1.0 percent and London added 0.2 percent, reversing initial losses.

Milan stocks closed down 0.2 percent, with banking shares slumping from 3 to 8 percent.

He also cautioned it presented another blow to Italy’s fragile banking sector.

Last month Donald Trump won the US presidential election, while Britain voted in June to leave the European Union.

Investors were comforted somewhat after Austria’s anti-immigration and euro-sceptic Norbert Hofer was defeated in his bid to become the EU’s first far-right president over the weekend.

London - FTSE 100: UP 0.2 percent at points 6,746.83 (close)

Frankfurt - DAX 30: UP 1.6 percent at 10,684.83 (close)

Paris - CAC 40: UP 1.0 percent at 4,574.32 (close)

Milan - FTSE MIB: DOWN percent at (close)

EURO STOXX 50: UP 1.2 percent at 3,051.62

Asia

The euro hit a 20-month low Monday and most Asian stocks retreated as a fresh wave of uncertainty hit markets after Italy’s prime minister resigned following a heavy referendum defeat.

The dollar also fell to 112.88 yen from 113.51 yen in New York Friday before recovering. The yen is considered a safe bet in times of turmoil.

The New Zealand dollar was off 0.5 percent against the greenback after the country’s Prime Minister John Key made a shock announcement that he was to resign.

Regional equity investors turned negative after a recent run-up fuelled by Trump’s win, which many say could lead to stronger growth in the world’s top economy.

Tokyo ended down 0.8 percent, while Shanghai slipped 1.2 percent, Sydney eased 0.8 percent and Seoul was 0.4 percent lower.

Hong Kong was down 0.3 percent. Shenzhen’s Composite Index, which tracks stocks on China’s second exchange, closed off 0.8 percent as worries over Italy overshadowed the start of an exchange link-up with Hong Kong. Wellington slipped 0.7 percent.

The tie-up, similar to one between Hong Kong and Shanghai two years ago, is being touted as the latest effort by Beijing to prove to global investors that its capital markets are gradually opening.

But analysts sounded a note of caution, pointing to a China slowdown, the weak yuan and expected US rate rises. Key figures arund 0800 GMT Tokyo - Nikkei 225: DOWN 0.8 percent at 18,274.99 (close)

Hong Kong - Hang Seng: DOWN 0.3 percent at 22505.55 (close)

Shenzhen - Composite: DOWN 0.8 percent at 2,068.17 (close)

Shanghai - Composite: DOWN 1.2 percent at 3,204.71 (close)

Oil

Brent crude oil rose above $55 a barrel on Monday, trading at a 16-month high, on rising prospects of a tightening market after OPEC agreed a landmark deal to cut production last week.

Monday’s gains take the rally since the agreement was struck on Wednesday to 19 percent for Brent, the biggest jump in almost eight years, and 16 percent for US crude.

Brent futures, the global benchmark used to trade oil, soared to their highest since July 2015 at $55.33 a barrel. They were at $55.04, up 58 cents, or 1 percent, at 1431 GMT.

West Texas Intermediate (WTI) crude traded up 48 cents, also 1 percent, at $52.16 a barrel.

“OPEC sentiment continues to support oil markets. Speculative short positions are still at elevated levels and as more traders unwind these positions they could trigger more support for oil prices,” said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.

The OPEC deal has given speculators impetus to increase bets on higher oil prices. Weekly data from the Intercontinental Exchange on Monday showed investors had raised net long positions on Brent to the highest level in four weeks.