Daily Management Review

Ahead of ECB, Euro and Global Stocks Hold Italy-Related Gains


12/06/2016




Ahead of ECB, Euro and Global Stocks Hold Italy-Related Gains
While Euro's bond yields dipped in line with U.S. peers as oil saw its first fall for five days, the region held firm on Tuesday, having seen a wild 3-cent swing in the wake of Italy's referendum.
 
After Europe's main bourses struggled into positive territory as bumper German data helped settle an early wobble and Wall Street's Dow Jones index hit a record high, Asian stocks saw their strongest day for 2 weeks overnight.
 
as a crucial European Central Bank meeting on Thursday loomed and sources predicting a precautionary state aid had been prepared for Banca Monte dei Paschi di Siena, Italy remained in focus.
 
While the euro held at $1.0767 having bounced strongly from as low as $1.0505 on Monday, Italian bond yields were back below levels seen before Sunday's referendum defeat for the government.
 
"The referendum result could put the ECB under pressure not to taper the asset purchase program but to extend it for six months beyond March (in its current form)," ING strategist Benjamin Schroeder said.
 
Hopes that Europe's largest economy is set for an acceleration in the coming months were raised as German industrial orders rose at their fastest pace for more than two years resulting in rise in shares.
 
the German economy ministry said that despite bulk orders being lower than usual, factories saw demand climb 4.9 percent on the month.
 
"The reading was very strong even without large-scale orders and that suggests it's more than just a flash in the pan," BayernLB economist Stefan Kipar said, noting that some firms might have brought orders forward.
 
As it emerged that Saudi Arabia's Saudi Aramco would cut its prices to big Asian customers next month and as data showed crude output rose in virtually every major export region, oil prices snapped a four-day winning streak.
 
The oil market was trying to find "some kind of level it is happy settling at", Freight Investor Services International fuel broker, Matt Stanley, said.
.
"I have a feeling it is more towards the $50 per barrel range than $55 per barrel, not least because there is still ambiguity around production levels."
 
A warning from the head of the central bank that the weakness could cause the bank to miss its inflation targets early next year was received by Turkey, where the lira has slumped to record lows in recent weeks.
 
After the country's insurance regulator suspended an unlisted firm from selling some products a day after a warning about "barbaric" share acquisitions by asset managers, financial shares in China weakened again.
 
Elsewhere, after Australia’s central bank struck a cautious note on the economy as it kept interest rates on hold, the Australian dollar dipped about a quarter of a percent.
 
As investors waited for what is widely expected to be a rise in U.S. interest rates next month, the U.S. dollar was near a three-week low.
 
"We are on the cusp of a period of rising interest rates," Chicago Federal Reserve President Charles Evans told reporters after a speech in Chicago on Monday.
 
(Source:www.reuters.com) 






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