Asian Stocks Hit 18 Month High; Europe, US Futures Bounce As Dollar Rises

Asian stocks hit their highest level in 18 months, with positive momentum lifting European shares which were helped by Societe Generale earnings. Yields fell on some of the euro zone’s battered low-rated bonds as investors put aside the political risks that have dominated markets this week. After trading flat, S&P futures bounced as US traders walked boosted by a spike in the USDJPY, ahead of earnings reports from Coca-Cola, Reynolds American, CVS Health, Nvidia and Twitter.
Rising oil prices pushed energy company shares higher in Europe on a busy day of corporate earnings while Asian stocks hit their highest in one and a half years. “The stabilization of the oil price after its recent wobbles, together with solid earnings, for example, Soc Gen today, is driving the positive sentiment,” said Andy Sullivan, portfolio manager with GL Asset Management UK in London.
The Euro STOXX 600 index rose 0.4 percent. Bank shares also rose after French lender Societe Generale reported lower fourth-quarter net income that nonetheless beat analysts forecasts. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3 percent to their highest since July 2015 with Hong Kong, Taiwan and China among the region’s best performing markets. Japanese shares, however, fell 0.5 percent, hit by earlier yen strength the day before Japan’s Prime Minister Shinzo Abe meets U. S. President Donald Trump.
“We have some relief with investors shrugging off some of their concerns with a feeling that things went too far, too fast,” said Martin Van Vliet, senior rates strategist at ING.
With much attention recently on global rates, yields on Spanish and Italian 10-year government bonds fell. Earlier this week, concern over the impact of elections this year in countries including France and Germany saw investors sell bonds of lower-rated euro zone countries. Spanish 10-year yields fell 4 basis points to 1.66 percent while Italian equivalents fell 3 bps to 2.2 percent. French yields dipped 1 bps to 1.01 percent. The premium investors demand to hold French rather than German debt hit its highest in four years on Wednesday, three months before the final round of a presidential election expected to include far-right, anti-euro candidate Marine Le Pen. Yields on German 10-year bonds, seen as among the world’s safest assets, rose 0.5 bps to 0.31 percent.

This post was published at Zero Hedge on Feb 9, 2017.

 

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