Global stocks take cue from Chinese equities and US interest rate outlook
by Nigel Stephenson,
2016-03-21 13:43:04.0
LONDON — Shares edged up in Europe and Asia on Monday, shrugging off a retreat in oil on concern over excess supply, as gains in Chinese shares and a benign US interest rate outlook brightened the mood.
The dollar edged up after falling for three successive weeks, most recently after US Federal Reserve policy makers revised down the number of times they expect to raise interest rates this year to two from four.
Sterling was a notable faller in the currency market. Traders cited concern over splits in the ruling Conservative Party over last week’s budget and a referendum on Britain’s European Union membership, after a pro-"Brexit" minister quit on Friday over spending cuts.
The pan-European FTSEurofirst 300 stocks index reversed early losses in basic resources companies to trade 0.2% higher at the start of a week shortened by the Easter break and, on Monday, a holiday in Japan.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1% after entering positive territory for the first time this year on Friday. However, shares in Australia and South Korea fell.
Chinese stocks rose. The CSI 300 index of the largest listed companies in Shanghai and Shenzhen closed 2.4% stronger while the Shanghai composite index gained 2.2%.
China’s state margin lender, the China Securities Finance Corporation, said it would resume some short-term lending after suspending parts of its business 18 months ago. It also cut brokerages’ borrowing costs.
"It’s a clear signal that regulators are ready to provide the market with easier, and cheaper funding," Pacific Securities analyst Wang Yu said.
Top Chinese officials said on Sunday that the economy was showing signs of improvement while capital outflows from the county were moderating.
Gyrations in the oil price, which are up about 50% from lows near $27 a barrel hit earlier this year, have been big drivers of financial markets in recent months, along with slowing growth in China and the outlook for US interest rates.
Brent crude, the international benchmark, last traded at $40.78 a barrel, down 42c as the number of active US rigs rose, potentially deepening the global glut of oil that has pulled prices down from $100 since mid-2014.
Dollar index
The dollar index, which measures the greenback against a basket of currencies, rose 0.2%. The euro fell 0.2% to $1.1245 while the yen gained 0.2% to ¥111.39/$.
Sterling fell 0.5% to $1.4401, pummelled after the resignation of eurosceptic Work and Pensions Secretary Iain Duncan Smith heightened concern over divisions in Prime Minister David Cameron’s government before the June 23 referendum.
"Sterling does not normally react strongly to UK politics so this is probably due to Brexit," said Richard Benson, head of portfolio investment at currency managers Millennium Global in London. "The referendum is just making people focus on issues like this a lot more."
Yields on low-risk German government bonds fell. Ten-year yields were last down 3.5 basis points at 0.19%. Gold last traded at $1,245.50 an ounce.
Reuters
Picture: THINKSTOCK
LONDON — Shares edged up in Europe and Asia on Monday, shrugging off a retreat in oil on concern over excess supply, as gains in Chinese shares and a benign US interest rate outlook brightened the mood.
The dollar edged up after falling for three successive weeks, most recently after US Federal Reserve policy makers revised down the number of times they expect to raise interest rates this year to two from four.
Sterling was a notable faller in the currency market. Traders cited concern over splits in the ruling Conservative Party over last week’s budget and a referendum on Britain’s European Union membership, after a pro-"Brexit" minister quit on Friday over spending cuts.
The pan-European FTSEurofirst 300 stocks index reversed early losses in basic resources companies to trade 0.2% higher at the start of a week shortened by the Easter break and, on Monday, a holiday in Japan.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1% after entering positive territory for the first time this year on Friday. However, shares in Australia and South Korea fell.
Chinese stocks rose. The CSI 300 index of the largest listed companies in Shanghai and Shenzhen closed 2.4% stronger while the Shanghai composite index gained 2.2%.
China’s state margin lender, the China Securities Finance Corporation, said it would resume some short-term lending after suspending parts of its business 18 months ago. It also cut brokerages’ borrowing costs.
"It’s a clear signal that regulators are ready to provide the market with easier, and cheaper funding," Pacific Securities analyst Wang Yu said.
Top Chinese officials said on Sunday that the economy was showing signs of improvement while capital outflows from the county were moderating.
Gyrations in the oil price, which are up about 50% from lows near $27 a barrel hit earlier this year, have been big drivers of financial markets in recent months, along with slowing growth in China and the outlook for US interest rates.
Brent crude, the international benchmark, last traded at $40.78 a barrel, down 42c as the number of active US rigs rose, potentially deepening the global glut of oil that has pulled prices down from $100 since mid-2014.
Dollar index
The dollar index, which measures the greenback against a basket of currencies, rose 0.2%. The euro fell 0.2% to $1.1245 while the yen gained 0.2% to ¥111.39/$.
Sterling fell 0.5% to $1.4401, pummelled after the resignation of eurosceptic Work and Pensions Secretary Iain Duncan Smith heightened concern over divisions in Prime Minister David Cameron’s government before the June 23 referendum.
"Sterling does not normally react strongly to UK politics so this is probably due to Brexit," said Richard Benson, head of portfolio investment at currency managers Millennium Global in London. "The referendum is just making people focus on issues like this a lot more."
Yields on low-risk German government bonds fell. Ten-year yields were last down 3.5 basis points at 0.19%. Gold last traded at $1,245.50 an ounce.
Reuters
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