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Daily Markets Update, 8 May

 

 

 

  • France´s youngest President Macron wins over LePen extreme right
  • Bourses , Euro mixed after positive openings
  • Oil rebounds on Saudi extended production cuts

 

European markets largely brushed off the results of the French presidential election on Monday as investors had already bet on a victory for centrist Emmanuel Macron, who vowed to reform France’s economy and fight Europe’s nationalist wave. Crude fluctuated as Saudi Arabia and Russia signaled output cuts will be extended.

 

 

“A lot of the story of Europe is it’s been held back by political risk,” said Ryan Myerberg, portfolio manager at Janus Capital .

Improvements in European confidence surveys and purchasing managers’ indexes, and a modest pickup in inflation.

European earnings are on track for their best quarter in a decade, according to strategists at Morgan Stanley .

 

Analysts are predicting that the lowering of political risk just as company profits are improving should over the medium term attract another wave of investment into European stocks. Last week the CAC 40 reached its highest level in nine years on hopes of a Macron victory.

Global stocks are trading at the highest ever, and U.S. equities also closed at a record last week after better-than-forecast data on American jobs.

 

Markets in Asia moved higher, supported by the outcome in France, a spate of robust corporate earnings and a slightly better-than-expected April jobs report in the U.S. on Friday, which lifted the S&P 500 and Nasdaq Composite to record highs.

Japan’s Nikkei Stock Average rose 2.3% to its highest level in 17 months as it reopened after public holidays.

Korea’s Kospi also added 2.3%, hitting an all-time high, while the S&P/ASX 200 in Australia gained 0.6% and Hong Kong’s Hang Seng Index added 0.4%.

Stock markets in China were lower, however, amid concerns that sustained regulatory tightening might force funds to exit. Investors were jolted by rumors on social media Friday that regulators were scrutinizing asset-management operations as part of efforts to cut leverage in the financial industry, the WSJ reports

The Shanghai Composite Index fell 0.8%.

Data also showed China’s trade surplus widened in April, but both exports and imports grew less than expected.

Concerns about China have weighed on metals prices in recent sessions. Copper futures fell 1.5% to $5,504 a ton on Monday, dragging down Europe’s basic resources sector.

 

The week ahead:

  • The annual Sohn Investment Conference is held in New York City, where top Wall Street investors including David Einhorn and Bill Ackman will share their insights with portfolio managers, asset allocators and private investors
  • Fed official Loretta Mester speaks on the U.S. economy in Chicago and James Bullard participates in a panel discussion in Atlanta on Monday.
  • South Korea heads to the polls on Tuesday to elect a new president following the ouster of Park Geun-hye in a corruption scandal.
  • Earnings this week include results from Walt Disney Co., Mitsubishi Corp., Toyota Motor Corp. and Deutsche Telekom AG.

 

Markets wrap up:

Stocks

  • The Stoxx Europe 600 slipped 0.2 percent at 10:36 a.m. in London, dragged down by miners.
  • Futures on the S&P 500 were down 0.2 percent. The benchmark gauge climbed 0.6 percent last week, closing Friday at an all-time high.

Currencies 

  • The euro fell 0.5 percent to $1.0945, after gaining as much as 0.2 percent earlier. The currency has been trading near the highest level since November.
  • The Bloomberg Dollar Spot Index advanced 0.2 percent following four straight weeks of declines.

Bonds

  • The yield on 10-year Treasury notes was flat at 2.35 percent.
  • French benchmark yields fell two basis points to 0.82 percent.

Commodities

  • West Texas Intermediate fluctuated before retreating 0.3 percent to $46.09 a barrel.
  • Gold climbed 0.2 percent to $1,230.20 an ounce. The metal fell 3.2 percent last week.
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