Global Stocks Edge Higher, Shrugging Off Turkey Coup Attempt -- Update
18 July 2016 - 8:02PM
Dow Jones News
By Christopher Whittall
Global stocks mostly edged higher Monday as investors shrugged
off the weekend's events in Turkey, signaling the country's failed
coup attempt wouldn't have a wider impact on financial markets.
The Stoxx Europe 600 was up 0.2% recently, led higher by
technology shares after U.K.-based chip designer ARM Holdings PLC
confirmed Monday it agreed to a buyout offer worth more than $32
billion.
Futures markets pointed to a 0.2% opening gain for the Dow Jones
Industrial Average, which climbed to a record close Friday amid
upbeat U.S. economic data.
The Turkish lira showed signs of stabilizing Monday after
registering its sharpest one-day fall since October 2008 on Friday
following news of the attempted coup. The lira was up 2% against
the U.S. dollar at 2.9568 recently. Turkey's central bank said
Sunday it would provide limitless necessary liquidity to the
country's banks to ensure financial stability.
Turkey's main BIST-100 index was down 4.8% Monday.
Investors view the events in Turkey as "isolated," said Paul
McNamara, a fund manager at GAM Holding AG, without a broader
impact on other markets.
"Looking at Venezuela and Ukraine, individual markets can have
isolated blowups as long as the causes are specific to them," he
said.
European technology shares rose sharply following confirmation
that Japanese telecommunications giant SoftBank Group Corp. is set
to buy ARM Holdings in an all-cash deal. Shares in ARM Holdings
jumped 43% on the news.
Asian markets mostly inched higher with the exception of the
Shanghai Composite Index, which fell 0.4% as investors weighed
China's latest growth data released Friday against a slowdown in
house price rises, according to data published on Monday. Markets
in Japan were closed for a public holiday.
Investors' attention will turn later to the U.S. corporate
earnings season, which got under way last week.
Bank earnings will remain in focus, with Bank of America Corp.
due to release earnings Monday and Goldman Sachs Group Inc. results
expected Tuesday and Morgan Stanley due Wednesday.
U.S. bank stocks have rallied broadly following a solid batch of
earnings from major lenders last week. J.P. Morgan Chase & Co.
and Citigroup Inc. beat expectations, while results from Wells
Fargo & Co. came in line with estimates.
The U.S. financial sector "does look like an area for upside,
also for more dividend growth," said Lucy Macdonald, chief
investment officer for global equities at Allianz Global Investors.
"You can't write off all the financials."
Elsewhere, investors will be looking ahead to the European
Central Bank policy meeting on Thursday--its first since the U.K.
voted to leave the European Union.
Investors pinning their hopes on central bank stimulus following
the Brexit vote have helped push stocks higher in recent weeks.
The Bank of England kept interest rates on hold last week, but
signaled it is likely to ease policy in August. Economists expect
the ECB to strike a dovish tone at its Thursday meeting, but to
stop short of boosting its stimulus measures.
Investors bought government bonds Monday, following a selloff
last week that ended a sharp post-Brexit rally after data releases
pointed to strength in the U.S. economy.
The yield on the 10-year Treasury note fell around 0.02
percentage point to 1.572% Monday as prices rose, according to
Tradeweb.
"The bond yield in the U.S. is going to be the biggest driver of
all assets as always," said Ms. Macdonald.
Despite their recent gains, Ms. Macdonald said that equities
look less overvalued than other assets. "At least they have some
growth," she added.
In currencies, the euro was up 0.1% at $1.1051, while the yen
was 0.8% weaker against the dollar at Yen105.6630.
Brent crude, the international oil benchmark, rose 0.2% to
$47.70 a barrel. Gold was up slightly at $1329 an ounce.
Write to Christopher Whittall at
christopher.whittall@wsj.com
(END) Dow Jones Newswires
July 18, 2016 05:47 ET (09:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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