By Riva Gold
Global stocks steadied Monday as market focus shifted from the
White House to this week's meeting of major oil producers and
updates from the Federal Reserve.
The Dow Jones Industrial Average added 76 points, or 0.4%, to
20881 shortly after the opening bell. The S&P 500 gained 0.3%,
and the Nasdaq Composite rose 0.4%. The moves come after U.S.
indexes recovered from a midweek drop with their best day in nearly
a month on Friday.
The Stoxx Europe 600 edged up less than 0.1%, while markets in
Hong Kong and Japan closed higher, echoing the recent rebound on
Wall Street.
Stocks had fallen last week amid concerns that uncertainty
around the Trump administration could derail plans for tax cuts,
regulation and infrastructure spending, but markets quickly pared
losses, ending the week just a touch lower.
"It's quite encouraging how we bounced back from that wobble
last week," said Ian Williams, strategist at brokerage Peel Hunt.
"It underlines very strong bottom-up corporate earnings performance
across all major developed markets ... that's been a big factor
offsetting geopolitical concerns," he said.
Of the 95% of S&P 500 companies that have reported results
so far for the first quarter, 75% have beat earnings per share
estimates, according to FactSet.
"It's largely an improvement in the economy," said Phil Orlando,
chief equity strategist at Federated Investors.
On Monday, a climb in oil prices and Chinese iron-ore futures
boosted commodity-linked stocks, supporting shares of energy
companies and miners.
Brent crude oil rose 0.5% to $53.89 a barrel, touching its
highest level in a month ahead of Thursday's meeting of the
Organization of the Petroleum Exporting Countries, where many
expect an extension to ongoing production cuts. Saudi energy
minister Khalid al-Falih said Sunday that oil producers are
enthusiastic about extending crude output cuts by nine months.
Stock investors have been watching the oil price this year, but
it hasn't had the same close ties to wider stock markets it had in
early 2016, when it fell below $30 a barrel and briefly moved in
lockstep with the S&P 500.
"I think $40-60 [a barrel] is a reasonably good sweet spot
markets are comfortable with," said Mr. Orlando. It is a level
where frackers can make money, but not so high that it is overly
inflationary or reduces consumption, he said.
In Europe Monday, technology, banks and auto shares fell,
keeping wider gains in check. Shares of Italian and Spanish lenders
came under pressure, while yields on 10-year Spanish debt rose to
1.597% from 1.555% Friday after Spain's Socialists re-elected a
former party leader who had taken a hard line against conservative
Prime Minister Mariano Rajoy, raising the chance of new
parliamentary elections within a year.
Greek yields fell to 5.543% from 5.642% amid expectations the
Eurogroup will ratify the end of the latest review of Greece's
bailout, while German bund yields edged up to 0.396% from 0.364%
and Treasurys were steady at 2.246% from 2.243%. Yields move
inversely to prices.
The WSJ Dollar Index edged down 0.1% following its worst week
since July 2016, with the British pound down 0.3% at $1.2993, but
the euro up 0.2% at $1.1231 after its best week in 15 months.
Many investors will be watching for minutes from the Federal
Reserve's May policy meeting, due Wednesday, as well as a raft of
speeches from Fed officials this week for any hints at when it
might start to reduce its $4.5 trillion balance sheet and how that
could affect the course of interest rates. Investors currently see
a 78.5% chance of a rate rise in June, according to fed-fund
futures tracked by CME Group.
In corporate news, shares of Switzerland's Clariant rose 8%
after it reached an agreement to merge with Huntsman in an
all-stock deal announced Monday that would create a chemicals giant
worth about $14 billion. The Wall Street Journal reported on the
talks Sunday.
Shares of aerospace and defense companies outperformed in the
U.S., while shares of Ford Motor rose 1.4% following news Jim
Hackett has been named Ford's new chief executive.
Earlier, Asian stocks rose as last week's global worries about
the U.S. political landscape continued to ease. Japan's Nikkei
Stock Average climbed 0.5%, led by steel, energy and machinery
companies. Data showed Japanese exports rose 7.5% in April,
advancing for a fifth straight month.
Hong Kong's Hang Seng Index rose 0.9% to its highest close since
2015, while South Korea's Kospi gained 0.7%, ending at a new
record. Investors largely shrugged off further missile tests by
North Korea over the weekend.
Australia's S&P/ASX 200 added 0.8% after its worst
performance in months, helped by a rebound in bank shares and
commodity prices.
Stocks in Shanghai and Shenzhen gave up early gains, however,
amid fears of a regulatory clampdown over brokerages'
shadow-banking business, shedding 0.5% and 1.4%, respectively.
Financials slipped after authorities slapped penalties on a broker
over alleged fake bond transactions.
Ese Erheriene, Yifan Xie, Kosaku Narioka, Paul Hannon,
Margherita Stancati and Jeannette Neumann contributed to this
article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
May 22, 2017 09:55 ET (13:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.