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Bloomberg
European stocks headed for the biggest gain in seven weeks, boosted by French equities after the country’s new president won a free hand to drive through economic reforms. Oil slid as fears of an ongoing supply glut refused to go away.
Banks and automakers were the biggest winners as the Stoxx Europe 600 gained a second day. The CAC 40 jumped after President Emmanuel Macron’s government claimed a historic majority in France’s legislature, albeit amid a miserable turnout. In Asia, the focus is on the MSCI Inc. decision on whether to include China A shares in its global indexes; Hong Kong stocks surged in advance of Tuesday’s announcement. The euro was steady as talks begin on the UK’s split from the European Union, while the British pound strengthened.
Investors are seemingly in risk-on mode as the week begins, even as a cloud of uncertainty swirls around both UK leadership and the outlook for Brexit negotiations. Macron’s decisive victory was another leg up for pro-European parties, while markets globally took the hawkish tone struck by the Federal Reserve last week in their stride. “Risk assets around the world are rallying again as the ‘carry party’ resumes,†Societe Generale SA strategist Kit Juckes wrote in a client note. Fed Chair Janet Yellen “did nothing to persuade the market†to take its hawkish outlook for the path of interest rates seriously, he said.
Chicago Fed President Charles Evans and Fed Bank of New York President William Dudley are both due to speak in New York on Monday. They are the first of a slew of Fed appearances scheduled for this week including Vice Chairman Stanley Fischer and Governor Jerome Powell. MSCI announces whether it approved Chinese-listed stocks in its global benchmarks. The $6.8 trillion onshore market is the world’s second-largest and accounts for 9 percent of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts. MSCI’s decision is expected on Tuesday after the close of US markets.
Samsung Electronics Co. led gains among tech shares in the MSCI Asia Pacific Index, climbing 2.2 percent. Japan’s Topix advanced as the yen weakened. Hong Kong stocks surged 1.2 percent before a decision on whether MSCI will include China shares in global indexes. The Hang Seng China Enterprises Index jumped 1.4 percent, the most since May 25.