European Stocks Called Higher as Global Markets Extend Renewed Rally
European stocks are expected to extend gains Tuesday amid a renewed equity market rally that has taken shares in Asia to their highest levels in a decade and boosted global stocks to a new all-time high.
A combination of cooling tensions between North Korea and its regional neighbours and overall investor relief that the human and economic damage from Hurricane Irma looks to be significantly smaller than anticipated added to market optimism on Wall Street Monday and extended through the Asia session.
Regional allies and global investors were also cheered by a U.N. Security Council agreement to step-up the level of sanctions on Pyongyang following a series of provocative missile and weapons tests. The sanctions include a limit on incoming fuel supplies and a ban on the country's textile exports.
The bullishness has financial bookmakers expecting solid gains for European benchmarks again Tuesday, with Britain's FTSE 100 called to open 0.3% higher at the bell, with slightly larger advances anticipated for markets in Germany, France and Switzerland.
Equity prices will likely get a boost from a softer euro, as well, with the single currency slipping below the 1.20 mark against the U.S. dollar amid a modest rebound for the greenback and some cautious words on low inflation levels in the region from European Central Bank Executive Board member Benoit Coeure on Monday.
Overnight in Asia, the dollar index, which measures the currency's strength against a basket of its global peers, gained 0.1% to a near one-week high of 91.94 as investors unwound so-called safe-haven bets and puts cash into riskier portions of the financial markets.
The dollar gains held down local currencies and boosted the attraction of domestic stocks to foreign buyers, helping the MSCI Asia ex-Japan index gain 0.2% to a 2007 higher before paring that advance into the start of the European session. A softer yen also fulled another strong session in Japan, where the Nikkei 225 closed at 19,776.62 points after a 1.18% gain.
Prior to the start of the Asia session, the MSCI All Country World Index, which tracks around 2,400 stocks in 47 countries, traded at an all-time high thanks in part to record-setting gains in the United States.
Global oils prices, however, slipped modestly in overnight trading at the start of the European session thanks in part to the stronger U.S. dollar and the steady return of U.S. refining capacity in the Gulf region to full speed in the wake of Hurricane Harvey.
West Texas Intermediate crude futures for October delivery were seen 0.16% lower at $47.96 each while Brent contracts for November, which is the broader benchmark for global prices, were marked 0.2% lower at $53.70.
Early indications from Wall Street futures, however, suggest a modest start to U.S. benchmarks at the opening bell, with the Dow Jones Industrial Average expected to add around 0.8% from yesterday's 22,057.44 points close and the S&P 500 is for now looking at little-change from its Monday record closing price of 2,488.11 points.
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