Europe Stocks Rise With S&P 500 Futures as Bonds Drop on Ukraine

Monday, 18 Aug 2014 06:09 AM

 

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European stocks rebounded with Standard & Poor’s 500 Index futures, while crude oil and bonds slipped as Ukraine and Russia met for talks and Kurdish forces made progress against militants in Iraq’s north. Irish 10-year yields fell to a record after the nation’s debt was upgraded.

The Stoxx Europe 600 Index rallied 1 percent by 9:44 a.m. in London, while futures on the S&P 500 advanced 0.5 percent. Asian stocks fluctuated as Chinese new-home prices dropped. Brent crude dropped 1.3 percent and gold fell for a second session. Ten-year Treasury yields rose three basis points and the rates on similar maturity German bunds and U.K. gilts climbed at least four basis points. The pound gained after the Bank of England governor spoke about the interest-rate outlook.

Ukraine and Russia made some progress in “difficult” talks in Berlin, German Foreign Minister Frank-Walter Steinmeier said. Kurdish forces took control of most of Iraq’s largest dam. New-home prices fell in 64 of 70 cities in July from a month before, according to China’s statistics bureau. U.S. inflation figures and Federal Reserve-meeting minutes are due this week.

We are seeing “a slight reduction in geopolitical risks,” Shane Oliver, a global strategist at AMP Capital Investors Ltd., which oversees about $131 billion said by e-mail in Sydney. “The trend in shares is likely to remain up and, while it’s impossible to be sure given uncertainties around various geopolitical risks, we may have already seen the low.”

Stoxx 600

The Stoxx 600 climbed today after rising 1.5 percent last week. The index pared its weekly advance on Aug. 15, after Ukraine said its troops partially destroyed a convoy that entered the country from Russia. All the 19 industry groups in the gauge rose today, with automakers advancing the most.

United Internet AG added 4 percent as the online-access and domain provider bought a 10.7 percent stake in Rocket Internet AG. Novartis AG gained 1.5 percent after NZZ reported the company is working on a new heart drug. Roche Holding AG increased 1.4 percent after people familiar with the matter said the drugmaker is in talks to buy the stake in Japan’s Chugai Pharmaceutical Co. that it doesn’t already own.

Neste Oil Oyj fell 2 percent after the Finnish company said production will fall at one of its refineries.

The volume of Stoxx 600 shares changing hands today was 15 percent lower than the 30-day average, according to data compiled by Bloomberg.

S&P 500

Futures on the S&P 500 expiring in September rose after the index gained 1.2 percent last week.

Clothing retailer Urban Outfitters Inc. is reporting earnings today. About 76 percent of S&P 500 companies that have posted results this season have beaten analysts’ estimates for profit, while 65 percent exceeded sales projections, according to data compiled by Bloomberg.

The MSCI All-Country World Index advanced 0.3 percent after last week’s 1.6 percent increase. The MSCI AC Asia Pacific Index slipped less than 0.1 percent today after last week’s 2.7 percent jump.

Brent dropped to $102.23 a barrel in London as West Texas Intermediate crude slipped 1 percent to $96.42 per barrel in New York, extending last week’s 0.3 percent drop, its fourth straight weekly loss.

Kurdish forces will have full control of the Mosul Dam in “just a matter of time,” Fuad Hussein, chief of staff for Kurdish Regional Government president Massoud Barzani, said by phone. The U.S. widened its airstrikes in Iraq at the weekend to help secure the dam near Mosul, Iraq’s largest northern city, after it was seized by Islamist militants. Iraq is OPEC’s second-biggest oil producer.

Precious Metals

Gold slid 0.2 percent to $1,301.96 an ounce in London trading, after retreating 0.7 percent Aug. 15, the biggest one- day decline this month. Silver rose 0.2 percent to $19.5977 an ounce, after last week declining for a fifth consecutive week. Palladium was little changed at $894.75 an ounce, after earlier reaching $896.01, the highest since February 2001.

The MSCI Emerging Markets Index added 0.1 percent, after the biggest weekly gain since March.

The ruble advanced 0.4 percent per dollar. Russia widened the band in which the ruble trades against the target basket of dollars and euros to 9 rubles from 7 rubles previously, the central bank in Moscow said on its website. The regulator also abandoned all interventions while the ruble is in the band.

Russia, Ukraine

Russia’s Micex index gained for a seventh day, the longest winning streak in 11 months. The gauge rose 0.6 percent. Credit default swaps fell 15 basis points after jumping 21 basis points on Aug. 15, when Ukraine said it partially destroyed an armed convoy that had crossed the border from Russian territory.

The hryvnia gained 0.7 percent and the 2017 Eurobond advanced, sending the yield six basis points lower to 10.15 percent.

Ukrainian Foreign Minister Pavlo Klimkin met his Russian counterpart Sergei Lavrov at talks in Berlin with France and Germany. Russia sees no progress on a Ukraine cease-fire and takes full responsibility for ensuring there are no illegal border crossings, Lavrov said after the talks.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong declined 0.4 percent, while the Shanghai Composite Index gained 0.6 percent. India’s S&P BSE Sensex index advanced for a fifth day, adding 0.8 percent.

Irish Bonds

Irish bonds climbed as Fitch increased the nation’s rating to A-from BBB+ on Aug. 15. The rate on Ireland’s 10-year bonds fell as much as four basis points to 1.949 percent, the lowest since Bloomberg started collecting the data in 1991.

Yields on 10-year Treasuries rose after falling the past three trading days, including a six basis-point drop Aug. 15. Inflation in the U.S. probably slowed to 2 percent in July from a year earlier, down from 2.1 percent price growth in June, according to a Bloomberg survey of economists before tomorrow’s data. The Fed publishes minutes of its July 29-30 Open Market Committee meeting on Aug. 20.

Germany’s 10-year yield climbed four basis points to 0.99 percent after dropping 10 basis points last week. The rate on similar-maturity U.K. gilts climbed seven basis points to 2.40 percent.

The pound strengthened to $1.6733 after Bank of England Governor Mark Carney said he won’t wait for wage increases to raise interest rates. Carney said in an interview with the Sunday Times that the currency’s climb from its 2013 low also won’t prevent an interest-rate increase.

Wheat fell 0.9 percent to $5.585 a bushel in Chicago, after gaining more than 3 percent the previous two sessions.

© Copyright 2014 Bloomberg News. All rights reserved.

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