World Stocks Gain
Global stocks notched further gains on Monday and the dollar stayed on the back foot, as investors bet the new head of the US Federal Reserve will steer a steady course on policy when he addresses lawmakers this week. MSCI’s index of world stocks was up 0.4%, with the pan-European Stoxx 600 up 0.7%.
Asian markets also rose, with Chinese stocks up 1.2% after the ruling Communist Party set the stage for President Xi Jinping to stay in office indefinitely, Reuters reported.
Much of the market’s focus during the coming week will be on monetary policy, with the heads of the European Central Bank and Bank of England set to give speeches.
Investors also seem to be wagering that Fed chair Jerome Powell will stick to that script at his first appearance before the house on Tuesday, followed by testimony to the senate on Thursday.
The expected lack of policy surprises from Powell saw yields on US 10-year treasuries back off to 2.86% and away from a four-year top of 2.957%, dragging down the dollar.
The dollar surrendered early gains to dip 0.3% against a basket of currencies to 89.66. That followed a 0.8% bounce last week.
Sterling was up 0.5% on Monday after Bank of England deputy governor Dave Ramsden said the bank might need to raise interest rates somewhat sooner than he had expected if wage growth picked up early this year.
The euro was 0.3% firmer on the back of dollar weakness, though investors largely held back from taking big positions ahead of a national election in Italy and the conclusion of coalition talks in Germany.
The Stoxx Europe 600 index, the region’s broadest measure of share prices, was marked 0.66% higher in the opening hour of trading, paced by a 0.6% gain for the DAX performance index in Germany and similar percentage gains for markets in France and Italy, Britain’s FTSE 100 added around 0.4% higher in the opening hour of trading in London, CNBC reported.
Europe’s technology stocks were among the top performers, up nearly 1%, after major telecom operators announced their respective timelines for the adoption of next-generation 5G networks. The scheduled rollout prompted shares of Temenos Group and Nokia to surge more than 2%.
Looking at individual stocks, Porsche shares rose towards to the top of the benchmark after a rating upgrade. Deutsche Bank upwardly revised its stock recommendation to “buy” from “hold” Monday morning, sending shares of the German automaker up around 3%.
Deutsche Bank rose 0.7% after it said it would float its asset management arm DWS on the Frankfurt stock exchange, as it fights to regain investor trust after years of scandals and restructuring.
Russian assets leapt on Monday, with stocks hitting an all-time high and sovereign dollar bonds and the ruble at near one-month highs after S&P raised Russia’s rating to investment grade. Moscow’s ruble-denominated shares rose over 1% and the dollar-denominated index leapt over 2%.
Chinese stocks rose for the sixth straight session ahead of the official and Caixin purchasing managers’ indexes due this week. The benchmark Shanghai Composite index rallied 40.55 points or 1.23% to finish at 3,329.57 while Hong Kong’s Hang Seng index rose 231.43 points or 0.74% to 31,498.60 after China’s ruling Communist Party proposed scrapping term limits for the country’s president, RTT reported.
Japanese shares rallied on the back of sharp rises in US stocks on Friday. The benchmark Nikkei jumped 260.85 points or 1.19% to 22,153.65 while the broader Topix index closed 0.81% higher at 1,774.81 ahead of a barrage of data due this week.
Seoul stocks rose on institutional buying ahead of Bank of Korea’s policy decision due on Tuesday. The benchmark Kospi rose 6.13 points or 0.25% to 2,457.65. Market heavyweight Samsung Electronics gained 0.3% after unveiling its new Galaxy S9 model.
The Dow climbed 1.4%, the tech-heavy Nasdaq Composite jumped as much as 1.8% and the S&P 500 shot up by 1.6%.
Australian shares rose for a fourth day, thanks to rising oil and iron ore prices as well as solid earnings results. The benchmark S&P/ASX200 index gained 42.40 points or 0.71% to finish above 6,000 points for the first time since February 5, while the broader All Ordinaries index ended up 40.90 points or 0.67% at 6,146.10.