Stocks climb as busy week begins; Italy spurs Euro: markets wrap

The dollar rally pauses ahead of a busy week for markets. (Bloomberg pic)

LONDON: European stocks rose with most Asian shares as investors braced themselves for one of the busiest weeks of the year, during which three of the world’s major central banks will set interest rates, President Donald Trump will meet North Korea’s leader and Brexit will return to the fore.

The mood was cautiously risk-on, with the Stoxx Europe 600 Index rising for the first time in five days as contracts for the S&P 500 edged upward and Treasuries fell with core European bonds. Earlier in Asia, shares in Japan, Hong Kong and South Korea showed modest advances while China stocks underperformed. Australia’s markets were shut for a holiday. Canada’s dollar fell in the wake of the G-7 meeting, which ended with deepening tensions over U.S. tariffs and saw a dispute erupt between Trump and Prime Minister Justin Trudeau. The euro rose and Italian bonds jumped after the country’s new finance minister confirmed his commitment to the common currency.

Investors are steeling themselves for more geopolitics to kick off the week, with Trump saying he feels “ very good” about Tuesday’s summit with Kim Jong Un. After that traders will switch their focus to the views of the world’s central banks. The Federal Reserve is expected to raise interest rates Wednesday, while European Central Bank officials are poised to hold the first formal talks on ending its bond-buying program Thursday. The Bank of Japan meets Friday, with no change to policy expected.

“The week seems to be starting in risk-friendly, G-7-ignoring mood,” Kit Juckes, a global strategist at Societe Generale SA, wrote in a note. “Maybe the Fed can hike dovishly not to worry markets, maybe we’ll see a temporary easing of euro-tensions let the currency trundle around in a range for a bit, but I’m not in the least inclined to be lulled into a false sense of security. Monday morning trades tell us little.”

Elsewhere, West Texas oil nudged lower in the wake of news that the number of rigs drilling for crude in the U.S. inched up and Russia boosted production. Bitcoin traded near a two-month low following a hacking incident at South Korean cryptocurrency exchange Coinrail.

These are some key events to watch this week:

President Donald Trump and North Korean leader Kim Jong Un meet for a historic summit in Singapore Tuesday U.K. Prime Minister Theresa May faces votes that could derail her Brexit policy, also Tuesday Federal Reserve is expected to raise interest rates Wednesday as the U.S. economy remains solid European Central Bank rates decision Thursday and briefing with President Mario Draghi Bank of Japan June monetary policy decision and news conference Friday FIFA expects more than three billion viewers for the World Cup that begins this week in Russia.

These are the main moves in markets:

Stocks
The Stoxx Europe 600 Index gained 0.5% as of 9:30 a.m. London time, the highest in a week on the largest rise in more than a week. The MSCI World Index of developed countries increased 0.2% to the highest in almost three months. The MSCI Asia Pacific Index climbed 0.1%. Japan’s Nikkei 225 Stock Average gained 0.5%. The MSCI Emerging Market Index gained 0.4%. The U.K.’s FTSE 100 Index advanced 0.5% to the highest in a week on the biggest gain in a week. Futures on the S&P 500 Index advanced 0.1%, hitting the highest in three months with its seventh consecutive advance.

Currencies
The Bloomberg Dollar Spot Index climbed less than 0.05%. The euro increased 0.3% to $1.1807, the strongest in almost four weeks. The British pound climbed less than 0.05% to $1.3409. The Japanese yen declined 0.4%to 109.97 per dollar, the largest drop in more than a week.

Bonds
The yield on 10-year Treasuries advanced one basis point to 2.96%. Germany’s 10-year yield climbed two basis points to 0.47%. Britain’s 10-year yield increased two basis points to 1.388%, the highest in almost three weeks.

Commodities
West Texas Intermediate crude fell 0.2% to $65.64 a barrel. Gold declined 0.3% to $1,295.91 an ounce, the weakest in a week on the biggest drop in more than a week.