The Monday Market Minute
- Global stocks gain as sentiment improves despite G-& Summit shambles.
- Trump rescinds U.S. signature on G-7 communique on trade, calls Canada's Trudeau 'dishonest' and 'weak'.
- European stocks open higher as ECB signals boost banks, Italy worries ebb after FinMin interview.
- Wall Street futures point to modestly stronger open as dollar eases, Treasuries hold at 2.96% ahead of Fed meeting.
- Oil prices slide on stronger Russian output, rising U.S. rig count.
Global stocks edged higher Monday ahead of what promises to be an extraordinary week for risk events around the world, with a trio of major central bank rate decisions, a key court case that could unlock billions in media sector mergers and a nuclear summit in Singapore that could mark a major advance towards peace on the Korean peninsula.
Worldwide reaction to the collapse of this weekend's G-7 Summit in Quebec City, however, suggests investors may not focus as much on the geopolitical and trade tensions that have dogged markets for the past few weeks as fundamentals remain robust in most of the major economies and corporate earnings and merger activity continues to impress. That said, President Donald Trump's extraordinary weekend attacks on Canadian Prime Minister Justin Trudeau, as well as trade and security allies in Europe, paint a worrying picture for the prospects of smooth global trading agreements in the months ahead.
Nonetheless, European stocks opened firmly higher Monday, with the banking sector leading the charge, as deeper bets on a change in policy from the European Central Bank this Thursday boost both the single currency and regional government bond yields. The Stoxx Europe 600 index, the region's broadest measure of share prices, gained 0.48% in the opening minutes of trading, while Italy's FTSE MIB benchmark surged 2.03% as investors piled back into Europe's third-largest economy following a weekend interview with Finance Minister Giovanni Tria that categorically rejected the idea of any plans to leave the single currency.
Germany's DAX performance index gained 0.54% to start the week even as shares in benchmark heavyweight Daimler AG (DMLRY) fell 1.4% following a weekend report from the Bild am Sonntag newspaper that alleged Germany's road regulator, the KBA, found so-called 'defeat devices' in the company's Euro 6 diesel fleet.
Early indications from U.S. equity futures suggest a mixed start to trading on Wall Street this week, ahead of the Federal Reserve's two-day meeting on interest rates that starts tomorrow, with contracts tied to the Dow Jones Industrial Average I:DJI pointing to an 54.4 point gain for the 30-stock index while those tied to the S&P 500 undefined indicate a 2.9 point bump for the broader benchmark. Nasdaq Composite I:IXIC futures gained 0.63 points.
TheStreet speaks with Makan Delrahim ahead of the AT&T-Time Warner decision.
Media stocks are likely to be in focus, both today and this week, ahead of U.S. District Court for the District of Columbia Judge Richard Leon's decision to approve or deny the proposed $85.4 billion merge between AT&T Inc. (T) - Get AT&T Inc. Report and Time Warner Inc. (TWX) .
- AT&T Questions Justice Department's Economic Model in Closing Arguments
- AT&T and Time Warner Must Now Play the Waiting Game
Should Judge Leon approve the deal without conditions, media companies with content stables -- such as Walt Disney Co. (DIS) - Get Walt Disney Company Report or 21st Century Fox Co. FOX -- could find themselves with a host of suitors as cable companies such as Comcast Corp. (CMCSA) - Get Comcast Corporation Class A Report , which is preparing a $50 billion bid for Disney, or internet giants such as Amazon Inc. (AMZN) - Get Amazon.com, Inc. Report , which just closed another sports rights deal with the U.K. Premier League.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was little-changed from its Friday levels at 93.58 as global risk sentiment improved and the euro traded at a near one-month high of 1.1818. Benchmark 10-year U.S. Treasury note yields held at 2.965% at the start of European trading.
With the Fed expected to boost its key lending rate to 2% Wednesday -- the CME Group's FedWatch tool suggests a 91.3% chance of a hike this week -- and the ECB primed to signal its slow but steady exit from five years of extraordinarily loose monetary policy Thursday in Riga, the Bank of Japan's two-day rate meeting, which concludes Friday, rounds out a week of central bank action that will both keep foreign exchange markets active and highlight the difficulty some central banks will have in match the pace of Fed tightening between now and the end of the year.
That said, the dollar's overnight easing offered some relief for emerging market economies, particularly those with high levels of foreign-currency debt, even as its near-term strength kept Asia currencies on the back foot and boosted export potential. Against that mix, the region-wide MSCI Asia ex-Japan index gained 0.36% into the close of the trading session while Japan's Nikkei 225 closed 0.28% higher at 22,804.04 points.
Global oil prices, however, softened overnight following a Friday report from Houston-based oil services provider Baker Hughes showed U.S. drillers added to Gulf-region installations last week, taking the total rig count to a March 2015 high of 862. Sentiment was also hit by weekend data showing Russia's early-June oil output rose to 11.1 million barrels per day.
Brent crude contracts for August delivery, the global benchmark for prices, fell 52 cents from their Friday close to change hands at $75.94 each in early European trading while WTI contracts for July, which are more-tightly connected to U.S. gas prices, slipped 27 cents to $65.47 per barrel.