European stocks started the week on the front foot as catalysts including a rebound in crude propelled equities toward the biggest gain in five days. The pound erased a gain as Theresa May prepared to spell out how EU citizens living in the U.K. will be protected in Brexit.
The Stoxx Europe 600 Index rallied led by food and beverage shares and Nestle SA after hedge fund Third Point confirmed it has amassed a $3.5 billion stake in the region’s biggest company. Italian equities also drove the gauge as the country stepped in to clean up two failed banks, while energy stocks climbed as oil rose a third day. Sterling declined as battle lines appeared to harden just a week into Brexit negotiations.
For equities it’s a bullish start to what looks set to be a busy week. The agenda for central-bank watchers is jam-packed, with speeches due from Janet Yellen, Mario Draghi, Mark Carney, Haruhiko Kuroda and more. Economic data may also drive momentum in financial markets, with key reports due on inflation, employment, manufacturing and housing from China to the U.S.
There is “very little risk we see any central bank surprises,” Robert Rennie, Sydney-based head of global market strategy at Westpac Banking Corp., 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.”
Meanwhile, multiple markets will be disrupted this week because of public holidays, including in India, Malaysia, Indonesia, the Philippines, Singapore, Bangladesh, Saudi Arabia, Bahrain, Egypt, Kuwait, Oman, Qatar, Turkey and the United Arab Emirates.
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What’s on investors’ watch lists this week:
- U.S. 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 percent 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:
- The MSCI Asia Pacific Index rose 0.2 percent, with Hon Hai Precision Industry Co. jumping 6.7 percent to lead an advance among technology shares.
- Taiwan’s Taiex index rallied 1.3 percent to the highest since 1990, while South Korea’s Kospi increased 0.4 percent to a record. Markets in India, Singapore and throughout much of Southeast Asia were closed for a holiday.
- The Stoxx Europe 600 Index gained 0.7 percent as of 10:43 a.m. in London, with Nestle surging 4 percent, the most in a year.
- Futures on the S&P 500 rose 0.3 percent. The underlying gauge added 0.2 percent last week as tech shares extended a rebound.
- West Texas Intermediate oil climbed 0.8 percent to $43.35 a barrel.
- Gold declined 1.2 percent to $1,241.53 an ounce, after a three-day advance.
- The yen fell 0.4 percent to 111.68 per dollar.
- The pound increased slipped 0.1 percent to $1.2710.
- The euro weakened 0.1 percent to $1.1182.
- The Bloomberg Dollar Spot Index rose 0.1 percent after three days of declines.
- The yield on 10-year Treasuries rose one basis point to 2.16 percent.
- U.K. benchmark yields were little changed at 1.03 percent.
- Italian yields fell three basis points to 1.88 percent.