European Shares Slightly Higher on Gains in Technology Shares -- Update
May 23 2017 - 5:31AM
Dow Jones News
By Christopher Whittall
European stocks and U.S. futures edged higher Tuesday, while the
British pound weakened slightly, as investors largely looked past
the news of a deadly explosion in the U.K.
The blast at a concert hall in Manchester late Monday, which
British police were treating as a terrorist attack, left at least
22 people dead. Such attacks in the Western world have had a
limited impact on financial markets in recent times.
The British pound slipped 0.3% against the euro on Tuesday and
0.1% against the dollar. Typical havens such as the yen and
government bonds initially registered small gains, but largely gave
those back during European morning trade.
"It's a tragedy," said Mike Bell, global market strategist at
J.P. Morgan Asset Management, but it doesn't have "a read-through
for markets."
The Stoxx Europe 600 was up 0.3% recently, led higher by gains
in technology, banking and auto stocks, following a mixed session
in Asia.
Futures pointed to a 0.2% opening gain for the S&P 500 after
the benchmark index ended higher for a third straight trading day
on Monday on the back of gains for technology and industrial
stocks.
U.S. stocks have bounced back from a sharp decline midway
through last week over concerns that political turmoil in
Washington could derail President Donald Trump's agenda. Some
analysts said a strong corporate earnings season and a robust
underlying economy have lent support to equity markets in recent
sessions.
"The reflation trade is evolving, but not ending. Yes, we have
some political noise, but the company fundamentals remain pretty
supportive," said Jean Medecin, a member of the investment
committee at Carmignac.
"In this environment we believe we are in a 'buy the dip'
market," he added.
In Europe, gains in technology stocks helped offset declines in
mining and real-estate stocks, following strong gains for U.S.
technology stocks on Monday.
Further signs that the European economic recovery is gathering
momentum also helped support local markets on Tuesday. Survey data
showed that eurozone economic growth continued to run at its
fastest rate in six years in May, according to estimates from IHS
Markit.
The U.K.'s FTSE 100, which tends to gain when sterling declines
because of the large number of companies in the index with revenues
that come from abroad, rose 0.2%.
Asian markets were mostly lower. The largest declines came in
China, where investors have been concerned about the pace of
initial public offerings--about 10 a week.
The Shanghai Composite Index was down 0.5%, while the Shenzhen
Composite Index fell 2.1%.
Japan's Nikkei Stock Average fell 0.3% and Australia's
S&P/ASX 200 declined 0.2%. Korea's Kospi index bucked the trend
to rise 0.3%.
In commodity markets, oil prices dipped after hitting their
highest level in a month in the previous session. Brent, the global
benchmark, was trading down 0.8% recently at $53.45 a barrel.
Market participants are looking ahead to the meeting this week of
the Organization of the Petroleum Exporting Countries, where the
group is expected to extend and even deepen its production
cuts.
In debt markets, Greek government bond yields moved higher on
Tuesday after the country failed to reach a debt-relief deal with
its creditors on Monday. Yields rise as prices fall.
The yield on the 10-year Treasury note declined from 2.254% on
Monday to 2.242%, according to Tradeweb. Investors are also looking
ahead to the release of Federal Reserve meeting minutes on
Wednesday, with some speculating the central bank could hold
interest rates steady at its June meeting following the recent
decline in the dollar and Treasury yields. Others say the Fed is on
track to continue raising rates.
"We think they're going to go in June. There seems no reason for
them not to--the economy seems strong," said Mr. Bell, who foresees
bond yields rising in the coming months.
Investors will also be keeping an eye on forthcoming economic
data releases, including new-home sales for April set to be
released later Tuesday, as well as durable goods orders and revised
gross domestic product growth figures for the first quarter on
Friday.
Ese Erheriene contributed to this article.
Write to Christopher Whittall at
christopher.whittall@wsj.com
(END) Dow Jones Newswires
May 23, 2017 05:16 ET (09:16 GMT)
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