Global Stocks Jump to Start the Week
August 19 2019 - 9:20AM
Dow Jones News
By Caitlin Ostroff
-- S&P 500, Dow futures tick higher
-- Asian, European stocks jump
-- U.S. Treasury yields rise
Global stocks climbed Monday on the prospect of progress in
U.S.-China trade talks and expectations of central-bank stimulus
measures across major economies.
S&P 500 futures rose 1%. The Stoxx Europe 600 added 1.1% in
afternoon trading, led by gains in its basic resources, autos and
banking sectors. The German DAX gauge rose 1.4% and the U.K.'s FTSE
100 was up 1.1%.
President Trump's comments over the weekend that talks with
China were going well helped lift investor sentiment, according to
a Deutsche Bank report. Mr. Trump tweeted that Chinese officials
could soon be visiting the White House for further
negotiations.
The markets were also buoyed after German Finance Minister Olaf
Scholz hinted over the weekend that the nation may carve out about
EUR50 billion ($55.55 billion) for a fresh fiscal stimulus package,
according to Craig Erlam, a senior market analyst at Oanda.
Patrick Spencer, vice chairman of equities at Baird, said
European bank shares have gained on easing recession fears, having
been "priced to a disaster scenario. They're in the bargain
bin."
Mr. Spencer said the fall in recession fears as well as a Friday
meeting of central bank leaders in Jackson Hole, Wyo., have buoyed
investor sentiment of further rate cuts and brought the market up.
Investors will also be looking to the release of minutes from the
Federal Reserve's most recent meeting to offer further clues on the
central bank's policy outlook.
U.S. Treasury yields were up, after a brief inversion of 10-year
and two-year yields last week stoked fears of a recession. The
10-year yield on Monday rose to 1.596%, from 1.540% on Friday.
Yields rise when prices fall.
Eurozone government bond yields were also up from last week,
with the U.K. 10-year gilt yield at 0.477% and the German 10-year
bund at minus 0.653%.
Bond markets this week will be focused on speculation around a
major stimulus package from the European Central Bank and German
fiscal stimulus, said Commerzbank strategist Rainer Guntermann.
Germany plans to sell a new 30-year bund on Wednesday.
In currencies, the British pound edged down against the euro,
slipping 0.4%. The pound also fell 0.2% against the U.S. dollar,
which has experienced a prolonged rally against other
currencies.
The pound's fall came on the heels of a leaked weekend report
that predicted a no-deal Brexit would lead to shortages in medical
supplies and food, reinforcing the negative impact of continued
Brexit uncertainty.
The WSJ Dollar Index, which measures the currency against a
basket of its peers, ticked up 0.1%.
Hong Kong stocks were among the best performers in Asia on
Monday. The Hang Seng Index rose 2.2%, its best performance since
June, as there was some relief that the weekend's large-scale
protest didn't end in violence.
Elsewhere in Asia, the Shanghai Composite rose 2.2%, while
indexes in Japan and Korea rose less than 1% apiece.
Chinese shares stood out with a strong rally, buoyed by a fresh
interest-rate reform by Beijing that is widely expected to result
in easier monetary policy.
An official blueprint to develop the southern city of Shenzhen
into a global technology hub and experiment with more financial
liberalizations there made the gains on the smaller exchange even
sharper.
Leading the pack were Shenzhen-listed technology firms and
brokerages that stand to benefit from a proposed reform of
share-listing policy. ZTE's stock rose 6.1%, while Citic Securities
increased 6.6%.
"Brokers are rising sharply because the Shenzhen development
plan indicates stronger determination by the government to further
open up the financial sector and encourage innovation," said Deng
Wenyuan, a Suzhou-based analyst at Soochow Securities.
In commodities, global benchmark Brent crude gained 0.6% to
$58.97 a barrel. Gold dropped 0.9%.
Shares of Weibo Corp. surged 4.9% in premarket trading Monday,
after the Beijing-based social media company reported a
second-quarter profit and revenue that beat expectations. Makeup
company Estée Lauder also saw shares rise 6.4% premarket on
increased net sales.
Shen Hong and Steven Russolillo contributed to this article.
(END) Dow Jones Newswires
August 19, 2019 09:05 ET (13:05 GMT)
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