Business Essentials for Professionals


Europe Weighs down Global Stocks Despite being on a High

Europe Weighs down Global Stocks Despite being on a High
Weighed down by a weak start to the session in Europe and political concerns that sent Germany's 10-year government bond yield to a record low, world stocks struggled to build on six-week highs after mixed Chinese data.
After two days of gains pushed the pan-European FTSEurofirst 300 index index to a one-month high, there was a fall of 0.5 percent as European shares fell.
"After 48 hours of gains due to fading expectations of a rate increase in the U.S. this summer, the market is seeing a correction even though there isn't much conviction," said Anthilia Capital fund manager Giuseppe Sersale.
Helped by buoyant crude oil prices and a dovish tone from Fed Chair Janet Yellen, the MSCI world equity index had risen in the previous session to the highest in more than six weeks but it managed to gain just 0.05 percent.  The MSCI tracks shares in 45 nations.
As investors weighed May Chinese imports that beat predictions against worse-than-expected exports, Asian shares edged up erasing earlier losses. Only 0.2 percent was added to the MSCI's broadest index of Asia-Pacific shares outside Japan.
Compared with an expected drop of 3.6 percent, Chinese dollar-denominated exports declined 4.1 percent in May from a year earlier. Noting the smallest decline since they turned negative in November 2014, imports fell 0.4 percent, less than the predicted 6 percent. China's trade surplus is forecast to hit $50 billion in May.
The Chinese central bank still expects the economy to grow by 6.8 percent this year despite the weak exports, the bank said.
Sentiment could be weighed by ongoing concerns surrounding the outcome of a UK vote on whether to stay in the European Union later this month, cautioned Anthilia's Sersale and added that the Chinese data were not that bad overall.
Germany's 10-year government bond yield, the benchmark for euro zone borrowing costs, touched a record low because of nervousness over Britain's referendum on its EU membership on June 23. The yield on the 10-year bond fell on Wednesday to below 0.04 percent.
"We are a few basis points away from negative territory and given the Brexit vote later this month, that may give it a final push, it is quite likely we will over the next couple of weeks dip into negative territory," said Martin Van Vliet, senior rates strategist at ING.
The pound was also swayed by Brexit concerns. After two polls gave a narrow lead to the "Remain" camp, the sterling gained roughly 0.8 percent on Tuesday and was steady at $1.4545.
But the dollar was sent to a five-week trough against a basket of currencies due to waning expectations that the Fed will raise interest rates anytime soon following a disappointing labour market report week.
After dropping as low as 93.68, the lowest since May 6 - the dollar index edged down by 0.1 percent to touch 93.740. The index tracks the greenback against a basket of six rivals.
Meanwhile, boosted by industry data showing a larger-than-expected drawdown in U.S. crude inventories, worries about attacks on Nigeria's oil industry and strong Chinese demand for oil, oil prices rose for a third day to hit their highest in about eight months.


Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc